Gold continues to hold above $1,900 an ounce as the latest trading week draws to an end with the precious metal at a similar level to where it was at the start of the week.
While this week has brought another interest rate hike from the European Central Bank, attention will soon shift to next week’s rate decisions from the Federal Reserve and the Bank of England. The fact that gold is still able to trade above $1,900 despite the continuation of central bank hikes, and the expectation of those rates staying higher for longer, illustrates how strong the support was for the safe haven asset earlier in the year with market confidence only creeping back into investors’ approach.
The slight buoyancy of gold on Friday has also been assisted by a slight weakening in the strength of the US dollar, the currency which gold has an inversely correlated relationship with as the metal is typically priced in dollars.
However, while gold has managed to stubbornly remain above $1,900 for the best part of six months now, the prospect of it holding above that threshold looks increasingly remote. Fears over a looming recession, which looked almost certain a few months ago, have continued to recede with each data point defying the gloom-bringers with China’s industrial production and retail sales the latest figures to surprise to the upside.
As such, traders and investors are likely to adopt an increasingly risk-on approach and favour equities and other riskier asset classes over the safe haven appeal of gold.
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 greenwash while investing sustainably.
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