Posted 5th June 2023

Gold Price News: Gold Holding Above $1,950 as Fed Looks Set to Pause Hikes

market outlook gold silver

Gold is holding comfortably above $1,950 an ounce with the precious metal still finding support on a positive day for equities markets. 

After Friday’s surprisingly strong US jobs figures, this week will be dominated by what course of action traders and investors anticipate the Federal Reserve taking when its interest rate committee meets next week. After initial consensus that a pause on further hikes was the likeliest choice, the outlook started to shift back towards the prospect of another increase before Patrick Harker’s comments last week once again made a pause the favourite.

Just as the consensus has oscillated, so has the price of gold and now after dropping about $100 from its early May peak, the precious metal looks to have found some stability above $1,950. 

Assuming the Fed does indeed hold off on any further rate hikes next week, then gold would be a beneficiary, along with vast swathes of equities, as for gold it would reduce its negative appeal at times of rising interest rates while for equities it would put a cap on borrowing costs. 

As such, next week may see the unusual continuation of gold and equities moving in the same direction. However, this phenomenon is unlikely to last for long as in the medium-term a bullish stock market outlook feeding off a strong US economy and a more dovish Fed would reduce gold’s safe haven appeal. So while gold continues to trade at elevated levels in the short-term, its medium outlook seems cloudier.

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.