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.
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.
