Gold is hovering either side of $1,800 an ounce with the precious metal going through a period of sideways trading while it awaits the next market driver.
Last week’s positive inflation figures have increased the likelihood of the Federal Reserve taking a less aggressive course with its interest rate moves in the early part of 2023. With the current price drift in the final full trading week of the year, gold looks to end 2022 at almost the same level it started – just under $1,800.
Given that the price climbed above $2,000 and sank close to $1,600 over the last twelve months, it has been a relatively volatile year with the precious metal prone to the actions and words of the Fed and its officials.
With stock markets remaining jittery with investors worried about a sustained global recession next year as well as ongoing Covid concerns in China and the fallout from the FTX debacle, the appeal of gold as a dull asset that ticks along steadily is more attractive now than it was during the recent bull run, free money cycle that boosted equities.
Against this underlying support for gold, the macroeconomic environment remains challenging for this non-yield-bearing asset with the Fed, the European Central Bank and the Bank of England all hiking their benchmark rates last week.
Yet despite those hikes, investors are trading more on the fact the Fed’s increase was smaller than previous months, so they are looking forward to 2023 with fewer and smaller hikes, something that will ease the pressure on gold and leave it well-poised to start the new year with fresh gains.
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