Gold Isn’t Immune to Stock Market Plunge Amid Likelihood of More Rate Rises Needed

A bad day on equities has also seen gold fall too with the precious metal failing to benefit from haven-seeking investors.

Concerns over a recession has triggered plunges in the price of oil and global equity markets yet while gold hasn’t suffered as steep a decline, the prospect of further tightening needed by central banks has dragged its price down too.

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Risk-off sentiment typically sees gold be one of the few beneficiaries but instead it has slipped below $1,830 an ounce. The latest figures from the UK confirmed that inflation continues to rise, with it now at a 40-year high, with Canadian data set to confirm that consumer prices are yet to peak there too. 

Already central banks, notably the Bank of England and the Federal Reserve, have been forced into a series of interest rate hikes and with inflation far from being tamed, the pressure to continue acting keeps on mounting. In this environment, the non-yield bearing asset of physical gold becomes less attractive with interest-paying assets favoured instead.

However, the broader context of a market fearing a global recession is likely to cap how far gold will fall with the asset having endured through countless previous recessions and proven a reliable store of value over time. 

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. 

As well as market analysis, Rupert writes longer-form thought leadership pieces on topics ranging from carbon markets, the growth of renewable energy and the challenges of avoiding greenwashing while investing sustainably.

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.