Gold continues to slip slightly lower to now trade around $1,980 an ounce having climbed as high as $2,040 an ounce earlier in the month.
After such a spectacular surge in which the price gained over $200 in just over a month, a slight pullback was to be expected. Even with the fallback below the psychologically important threshold of $2,000 an ounce, gold remains well supported and is still trading at a very high level historically.
Gold’s surge was sparked by the fallout in the US banking sector while the more recent downtrend is a result of the reality of the Federal Reserve and other central banks are still likely to implement further interest rate hikes.
However, with the Fed, in particular, looking like it is drawing close to the end of its cycle of hikes, the negative impact of an environment in which interest rates are rising, which reduces the appeal of the non-yield-bearing physical gold, may soon be removed too. In contrast to physical gold, the Kinesis KAU offers the security of a physically-backed asset with the added benefit of providing a monthly return to its users.
While market confidence remains so fragile, gold’s safe haven appeal is likely to remain attractive to investors for a good while yet so while it will take a fresh catalyst to see the price return back above $2,000 an ounce, gold is unlikely to fall below $1,950 any time soon.
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