Gold continues to trade near its highest level in a month after Friday’s US unemployment data showed an unexpected increase, increasing the likelihood of the Federal Reserve holding off on further interest rate hikes.
On a trading day that is likely to be much more subdued with the US celebrating Labor Day, gold looks set to rise alongside equities. While more often gold and equities have an inverse correlation, both are benefiting from the prospect of the Fed’s aggressive policy to curb stubbornly high inflation is finally drawing to a close.
Gold’s scope for considerably higher gains will ultimately be limited by the amount of confidence that flows into markets over the coming weeks and months and investors’ risk appetite. For the bulk of 2023, investor confidence has been very fragile with gold, as the ultimate safe haven asset, the primary beneficiary.
If this trend starts to unwind in the final part of the year with investors more willing to back equities, then gold’s appeal will be more muted, making a fresh challenge of $2,000 an ounce less likely.
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.
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.