Gold continues to trade just below $2,000 an ounce with the precious metal set to record a second monthly gain on the back of investors’ rush to safe havens earlier in the month.
While gold may have dipped slightly from the highs achieved earlier in April, there remains plenty of support for the haven asset while market confidence is still so fragile. A broadly positive set of corporate earnings has failed to have a detrimental impact on the gold price – illustrating investors’ medium-term concerns about the health of the global economy and the banking sector.
As we look ahead to May, next week’s Federal Reserve interest rate decision on Wednesday followed by the European Central Bank on Thursday is likely to set the early tone for gold. While both banks are expected to increase their rates by 25 basis points, the commentary that supports these moves will have a significant impact on how long gold can remain at these elevated levels.
After a strong run in March and April, gold investors will be hoping that next week’s hikes, particularly that of the Fed, are close to the final ones in this current cycle of increasing interest rates. If that does prove to be the case, then gold has sufficient support to keep it trading in the high $1,900s for the foreseeable future while hints of further hikes needed may push it back down towards $1,900.
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