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.
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.
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.