Gold has slipped back below $2,000 an ounce following hawkish comments by Federal Reserve officials about the need for more interest rate hikes.
The dip below the psychologically important threshold reflects a macroeconomic environment in which interest rates are still rising with the European Central Bank, as well as the Fed, set to raise their benchmark rates in May. Still even with the recent pullback, gold remains at very elevated levels considering the price was languishing close to $1,800 an ounce as recently as early March.
Confidence in the banking sector will take a while to return after the collapse of three US banks and the rushed sale of Credit Suisse and gold was the biggest beneficiary of that crisis thanks to its time-honoured safe haven appeal and lack of counterparty risk. So while the very short-term movement is currently down, gold is likely to quickly find support and continue to trade close to $2,000 an ounce.
While the Fed and other central banks are yet to reach the end of their hiking cycle, the expectation is that it is drawing near and as a result, the main drag on gold prices is also drawing close to ending. An equities market lacking in confidence, the end of the interest rate hikes drawing near and a weaker US dollar all point to a gold price that is likely to stay higher for longer.
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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