Gold is hovering on either side of $1,800 an ounce as traders and investors try to work out the likeliest interest rate trajectory for the Federal Reserve.
With gold having received a huge boost from expectations that the Fed might be turning more dovish in the New Year, without any actual moves or words from the US central bank and its officials investors will be wary of a readjustment of the narrative causing the price to tumble again.
Later today, the market will receive another data point on US inflation, and if this shows the pace at which consumer prices are rising remains stubbornly high then this will increase the pressure on the Fed to continue hiking interest rates for a while yet.
As gold heads towards the final week of 2022, this vulnerability to the actions of the Fed remains the dominant theme, as it has for most of the year. Gold’s strong trading performance from the lows of early November, even though the Fed did implement another rate hike in December, has left its price looking overbought with the gains driven by sentiment rather than fact.
As such, gold enters the festive season with concerns about what the new year has in store.
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