Gold is ending another strong week by holding around $1,930 an ounce as investors take the opportunity of a quieter day on the macroeconomic front to digest this week’s data and comments from Federal Reserve officials.
In some ways, this week has not brought anything new, rather underline the current position. Although inflation looks to have peaked it still remains way above the Fed’s 2% target and therefore requires further hikes to ensure the rate at which consumer prices are rising continues to slow.
The fact that gold has been able to make such large gains, to now be trading close to its highest level since April, even though another rate hike is near certain when the Fed next meets, continues to surprise. Gold really has caught a fair wind and is sailing ever higher on it.
The lingering concern remains however that gold has climbed so much already before the Fed, and other central banks, actually hit pause on their rate hikes and this leaves the precious metal highly vulnerable to a sudden price drop if interest rates don’t stop climbing as soon as anticipated.
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