Gold is making small gains on Friday but is still set for a considerable weekly loss after finding itself dragged down by the broader sell-off on equities.
With inflation running at levels not seen for 40 years on both sides of the Atlantic, central banks are being forced to keep on raising interest rates to try and reduce the rise in consumer prices. Federal Reserve Chair Jerome Powell reiterated earlier this week that the central bank is “strongly committed” to bringing down inflation, suggesting that further rate hikes are near certain with another 75 basis point increase in July the next step on the way to a benchmark rate of between 3% and 3.5%.
Live Gold Price – $/oz
It is this likelihood of further significant interest hikes that has stalled gold’s potential to make any gains from the risk-off sentiment seen across markets that has seen equities suffer further bleeds to the stock prices.
Indeed for the time being, gold is making similar moves to equity markets, rather than its usual inversely correlated relationship as the prospect of further tightening by central banks reduces the appeal of growth stocks and the non-yield bearing gold alike.
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.