Gold starts a new trading week trading around $1,650 with the ongoing prospect of more large interest rates by the Federal Reserve before the end of the year continuing to weigh on the price.
Another high inflation print last week has increased the likelihood of the Fed hiking rates in both November and December by 75 basis points with the Bank of St Louis President James Bullard mentioning his preference for “front-loading” rate increases when speaking at the weekend.
In this environment where central banks are more focused on the size of any rate hikes rather than whether to raise interest rates at all, it is hard for gold to find any significant support with the precious metal’s lack of yield making other interest-paying assets, notably bonds, more attractive to low-risk seeking investors.
Yet while it is hard to see gold making significant gains, the prospect of the Fed, and other central banks across the world, continuing to implement further hikes has largely been priced in and is now reflected in gold’s plummet from the highs of close to $2,000 an ounce seen as recently as April.
As such, gold now finds itself in a situation where any significant dips towards $1,600 an ounce prompt an uptick in physical demand from Asian buyers, providing a floor on the price, while the US hawkish monetary policy prevents gold from climbing above $1,700 an ounce.
Rupert is a Market Analyst for Kinesis Money, responsible for updating the community with insights and analysis on the gold and silver markets. He brings with him a breadth of experience in writing about energy and commodities having worked as an oil markets reporter and then precious metals reporter during the seven years he worked at Bloomberg News.
As well as market analysis, Rupert writes longer-form thought leadership pieces on topics ranging from carbon markets, the growth of renewable energy and the challenges of avoiding greenwash while investing sustainably.
This publication is for informational purposes only and is not intended to be a solicitation, offering or recommendation of any security, commodity, derivative, investment management service or advisory service and is not commodity trading advice. This publication does not intend to provide investment, tax or legal advice on either a general or specific basis
