Gold is down for its third consecutive day with the precious metal now trading comfortably below $2,000 an ounce.
While safe haven demand continues to be strong amid Israel’s ongoing attacks on Gaza, today also brings the latest Federal Reserve interest rate announcement that will provide a reminder of the “higher for longer” stance of central banks.
As a result, even though gold has dipped slightly from the highs achieved at the end of October, the price remains at a very high level historically with the recent movement more reflective of a slight correction rather than a broader downward trend.
Today’s Fed rate decision is widely expected to see the US central bank keep its rate unchanged at 5.5% but while rates may not rise further, the prospect of any cut in the coming months looks remote. As such, gold will have to face this permanent headwind of high-interest rates, making the non-yield-bearing asset less attractive.
While the peak of gold above $2,000 an ounce may have passed for now, the precious metal is unlikely to slide much further before fresh support rushes in.
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.
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.
Read our Editorial Guidelines here.
