Gold has slipped back below $1,750 an ounce after a range of recent comments by Federal Reserve officials reminded investors that further interest rate increases are still likely in the coming months and talk of a pivot is premature.
Gold has still managed to hold onto the bulk of impressive gains earlier in the month, as while traders may be reappraising their interest rate curves in the light of the reality checks delivered by Fed officials, the fallout across the crypto sector has kept gold supported.
It is interesting to note that gold hasn’t been moving in close a step with equities as has typically been the case, where a good day on stock markets is usually a negative factor for gold and a bad day for equities usually seeing gold as a beneficiary. This breakdown in the negative correlation points to how tied up the gold price has become to the actions and words of the Fed and its officials.
Today’s drop on equities over concerns that China will impose further restrictions in the wake of recent Covid deaths hasn’t given gold a boost with the stronger dollar as a result of the hardening of the Fed officials’ stance on the size of the December interest rate move more than offsetting any risk demand for gold.
As such, while gold received a huge boost earlier in the month when sentiment shifted towards the Fed withdrawing its policy of interest rate hikes as soon as the start of next year, another 75 basis point hike in December could see gold come crashing back below $1,700 an ounce.
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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