Gold remains in similar territory to where it has traded for the last couple of weeks as traders and investors prepare themselves for a busy week full of central bank rate decisions, including the Federal Reserve.
With the latest inflation figure out of the US showing that the pace at which the price of consumer goods is rising continues to slow, this has provided more bandwidth for the Fed to operate within and increased expectations that this week’s rate decision will bring a 25 basis point hike, three times smaller than most of the increases in 2022.
This less aggressive stance by the Fed has long since been priced in for gold with this change in sentiment being the catalyst for the precious metal’s impressive rally from early November onwards.
As a result, this week could well see gold remain in a similar range to where it is currently with the data so far continuing to align with expectations and therefore enabling the facts to catch up with a gold price that had surged to its highest level for nine months mainly on sentiment.
On a week in which central banks are the focus, it is also worth remembering that central banks, particularly China, India and Turkey, are a key factor behind gold’s elevated price with 2022 proving a very active year for banks buying gold as these nations look to bolster their currencies and reduce the global hegemony of the US dollar.
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.