Gold Set For Rare Weekly Gain on Prospect of Rate Hikes Ending Soon

Gold looks set for a rare weekly gain even with Friday’s slight dip as the pressure the precious metal has been under from an aggressive Federal Reserve eased slightly.

Yesterday brought another large interest rate hike, this time from the European Central Bank, reminding investors that while the trajectory of the interest rate curve may have eased off, it will continue to climb for a few months yet.

So while the prospect of the Federal Reserve, and other central banks across the world, being able to reduce their aggressive rate hikes earlier than initially feared has lent gold some light relief, this remains an environment where rates are still going up. As such, gold with its lack of dividend is unlikely to continue making significant gains and is more likely to consolidate around its current level of $1,650 an ounce.

Company results out this week have generally been disappointing, underlining the difficulties central banks face in trying to raise rates sufficiently to curb inflation without tipping their economies into long-term recession. 

As such, central banks are likely to be more cautious in coming months while gold may also get a slight lift by the continuing bleak picture on equities with investors instead choosing to park their money in gold now that the precious metal has shown signs that it reached its bottom earlier in the month.

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.

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