A weakening in the strength of the US dollar has given gold a slight boost at the start of a new week of trading, with the price now climbing above $1,850 an ounce. The dollar’s dip is the latest reaction as investors take the chance to fully assess the potential impact of the Federal Reserve’s tightening of monetary policy. Initially, inflation concerns and the withdrawal of stimulus hit equities, particularly growth stocks, hard with gold also dragged down in an environment where multiple interest rate hikes are anticipated. Live Gold Price - $/oz Now, having had time to reflect on the broader economic outlook with no new major drivers in recent weeks, there has been an adjustment of prices across asset classes to better reflect their “true” value after a punishing couple of weeks. The economic outlook isn’t as bad as the brutal sell-off suggested so the week has started with dips for the dollar and gains for equities and gold. While today’s increase is welcomed by holders of gold, how much further the precious metal can climb is likely to be capped by the reality that central banks in both America and Europe are set on a course of interest rate hikes over the coming months. The readjustment illustrates the underlying support that remains for gold yet with the hawkish environment creating considerable resistance, the price is likely to remain around current levels for the time being. 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 inwriting 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 renewableenergy and the challenges of avoiding greenwashing 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.
23/05/2022
Gold is set for its first weekly gain in a month having finally found some support from the broader sell-off in equities. Now trading between $1,840 and $1,850 an ounce, gold has responded positively after starting the week below $1,800 an ounce. In such volatile and jittery trading conditions, with investor confidence hit by sustained elevated inflation and broader growth concerns, gold initially saw it being dragged down rather than benefiting from haven seekers. The main headwind for gold remains the Federal Reserve’s hawkish monetary policy, with further interest rate rises of 50 basis points all but guaranteed in both June and July. Live Gold Price - $/oz This macroeconomic climate will cap how much territory gold can recover but the strong initial recovery after slipping below $1,800 demonstrates where the strongest support for gold lies. The recent dominance of the Fed’s actions as the driver for the gold price has overshadowed other factors that are supportive for the ultimate haven asset. The war in Ukraine is sadly showing no sign of ending any time soon while the cause of the Fed’s hawkish pivot, rising inflation, is in itself a supportive factor for gold as an asset that has proven itself to hold its relative value over centuries. Now that gold has finally found some support, the price may well be set for a period of sideways trading around its current range. 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 inwriting 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 renewableenergy and the challenges of avoiding greenwashing 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.
20/05/2022
Inflation is yet again the major talking point on Wednesday after the UK’s latest figures showed that annual inflation is at its highest level since 1982. However, despite inflation now standing at 9% in the UK, as the figure was in line with expectations, the market reaction has been muted so far with gold trading little changed at around $1,815 an ounce. This level represents a small improvement from the start of the week with the price managing to bounceback above the key level of $1,800 an ounce after slumping to levels last seen in early February. Live Gold Price - $/oz Yet as long as inflation remains a primary concern for the major economies, gold is likely to find it difficult to make significant gains with the spectre of rising interest rates severely denting the metal’s appeal. While inflation in the US is running a little less hot than in the UK, it is still a major source of worry with Federal Reserve Chair Jerome Powell stating yesterday that the bank will use all of its tools to bring inflation significantly lower and reinstating the likelihood of 50 basis point rate increases in both June and July. The fact that gold did recover back above $1,800 shows there is still support for the asset but investors hoping for a price above $1,850 may have to wait some time yet. 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 inwriting 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 renewableenergy and the challenges of avoiding greenwashing 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.
18/05/2022
A new week hasn’t provided any relief for gold after one of its worst weeks in the last year has now pushed the price down below $1,800 an ounce for the first time since the start of February. Gold’s slump has been driven by concerns that the measures implemented by central banks will not be sufficient to tackle high escalation. The Federal Reserve is set to implement a series of interest rate hikes over the coming months, having already raised rates by the most considerable amount in over 20 years earlier this month. Live Gold Price - $/oz This week brings the latest inflation data from the UK with the print likely to show that the pace at which consumer prices are rising is still not slowing down. Across the pond, the hope is that April’s US figure will represent the high point and that inflation will slow down from this point. However, markets remain very jittery with a huge amount of volatility last week set to continue into this week based on gold’s initial plunge in early Monday trading. Having now fallen through the psychologically important threshold of $1,800 an ounce and with the hawkish monetary policy more likely to strengthen than weaken, it is hard to see where gold can now find a short-term foothold. 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 renewableenergy and the challenges of avoiding greenwashing 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.
16/05/2022
Gold is showing tentative signs of regaining some ground after a punishing week on equity markets that, unusually, has seen the ultimate haven asset pulled down too to be trading at levels last seen in early February. Indeed so far in early Friday trading, the bulk of equity and commodity markets are trading a little higher as investors view that this week’s losses may be an overreaction and taking advantage of lower levels to buy undervalued stocks. Live Gold Price - $/oz While the latest US inflation data did come in above market expectation, crucially it was lower than the previous month, giving hope that the worst of fast-rising consumer prices in the world’s largest economy may now be behind us. If this is confirmed over the coming months, then the Federal Reserve will be able to keep interest rate rises to 50 basis points, rather than 75 basis points or higher, providing markets with a clear trajectory to trade around. Gold’s role within this environment of hawkish central bank policies contrasted by global equity indices nearing bear market territory presents a clear resistance and support factor on either side of the equation. As such, gold’s current trading level below $1,830 an ounce looks too cheap yet any gains are likely to be capped with a series of rate hikes diminishing gold’s appeal as a non-yield bearing asset. 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 inwriting 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 renewableenergy and the challenges of avoiding greenwashing 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
13/05/2022
Inflation is once again the focus of attention today with the release of the US’ April data. The market is expecting the figure to be slightly lower than the previous month but remain at a historically high level, above 8%. While any step lower will be welcomed with hopes that inflation in the US may have peaked, the pace consumer prices are rising remains far above the Federal Reserve’s target rate of 2% rate, forcing the US central bank to continue its series of hawkish measures to bring inflation down to more comfortable levels. Despite this providing a negative outlook for gold, the price of the precious metal has perked up early on Wednesday to trade near $1,850 an ounce. In fact, equity indices are generally pointing upwards after a volatile few days of trading so far in May. Live Gold Price - $/oz For both gold and equities, today’s gains are likely a reflection of both asset classes being oversold in recent days after a brutal end to last week and start of this week in the markets. The outlook for a series of interest rate hikes by the Federal Reserve, as well as the Bank of England and European Central Bank, over the coming months does cap how high gold can climb. On the other side, any dips in gold’s price will attract buying interest from traders noting gold’s appeal as a hedge against inflation as well as a valued haven asset while the war in Ukraine continues. As such, gold is likely to remain within the $1,840-$1,870 an ounce range until a significant new factor emerges to outweigh the dominant drivers currently. 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 inwriting 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 renewableenergy and the challenges of avoiding greenwashing 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
11/05/2022
