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.
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