Posted 30th June 2023

Gold Price News: Gold Drifts Downwards on Hawkish Pressure From Central Banks

gold bar graph stack AU

Gold is still just about trading above $1,900 an ounce as the prospect of more interest rate hikes continues to weigh on the precious metal.

Yesterday’s US jobs data showed the world’s largest economy remains in good health, giving the Federal Reserve more breathing space to increase interest rates further if today’s inflation data provides another stubbornly high reading. In a week in which central bankers have spent the week talking up the need for more hikes at their forum in Portugal, it seems that gold is unlikely to benefit from any rate relief any time soon.

gold price chart kinesis exchange
Gold price ($/g) – from Kinesis Exchange – 24-hour view

So far gold’s decline has been one of slow drift rather than any sharp plunges during an environment in which interest rates are likely to continue rising, investors are still not convinced of the bull case for equities, especially with some countries potentially already in recession.

As such, while gold’s appeal may have dwindled from the peaks of the US banking crisis earlier in the year and indeed in early May when it seemed that the Fed may have peaked on its interest rate hiking cycle, there remains sufficient support for gold to partially offset the challenging macroeconomic environment it now finds itself in. 

Soon gold will be trading below $1,900 an ounce with that slow drift downwards likely to continue for a while yet until there is a fresh catalyst. Yet while $1,900 may be down from the highs seen in early May, it is still a historically high level for gold and a reminder of how much underlying support from central banks and other institutions there is for one of the world’s oldest investment classes.

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