Gold is sitting pretty comfortably above $2,000 an ounce after last month’s surge of safe haven demand has now been sustained by the prospect of the Federal Reserve nearing the end of its interest rate hike cycle.
After March proved a fantastic month for gold, the price has continued to climb higher so far in April to reach levels not seen for over a year. While the initial fears of a broader banking crisis now look to be contained, market confidence remains low with investors keeping their risk-averse trades in place.
The market conditions play right into gold’s hands with the precious metal further supported by a weakening of the US dollar, against which gold typically enjoys an inverse relationship. Add in the likelihood of gold’s major headwind, rising Fed interest rates, coming to an end in the months ahead and the short to medium-term course for the ultimate haven asset looks set fair.
With the price now having broken through the $2,000 an ounce barrier with sufficient strength to hold above this key psychological threshold, it looks like gold can continue to trade at these elevated levels until market confidence picks up and traders’ outlook towards equities and the health of the global economy turns more optimistic. Right now, that looks some way off.
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