Posted 26th September 2022

Gold Near 29-Month Lows Under Pressure From Global Rate Hikes

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A new trading week hasn’t brought any change to gold’s fortunes with the price slipping to levels not seen since April 2020.

Last week’s series of interest rate hikes by central banks had put gold under heavy near-term pressure and with no prospect of the banks changing course in the coming months, the medium-term outlook also looks gloomy for the precious metal.

The end of this week will bring a slew of inflation data which is expected to show that consumer prices are still rising at an ever faster pace with the peak still not reached. This will reinforce the hawkish strategies of central banks who have been using rate hikes to try and bring inflation back down to their target figure of around 2%, something that looks like a remote hope currently. 

Today sees Christine Lagarde, President of the European Central Bank, appearing before the European Parliament while across the Atlantic, three senior Federal Reserve officials will be speaking at different events with every word of these senior bankers scrutinised by markets to gain an insight on how hard and for how long interest rates are likely to continue rising both in Europe and the US.

Gold investors will be clinging to hopes that inflation will soon peak so these rate hikes that have pushed gold’s price down so far in recent months will finally relent. However, they are likely to have to wait for a while yet.

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