Gold looks set to fall below $1,900 an ounce after the latest UK inflation data showed price pressures remain stubbornly high, increasing the likelihood of the Bank of England implementing another sizeable hike to its interest rate at a time when the Federal Reserve is still undecided on its next move.
Traders and investors should gain more insight into the prevailing view among the Fed’s interest rate committee with the release later today of the minutes from the July meeting. However, since then the mood and rhetoric from senior Fed officials has turned more hawkish with Minneapolis Fed President Neel Kashkari stating that while inflation is moving in the right direction, “it’s still too high”.
The current macroeconomic environment, where more interest rate hikes remain on the cards, is putting pressure on gold as its lack of yield makes other interest-bearing assets more attractive instead.
The main factor slowing gold’s decline is the lack of confidence in the health of the global economy with the latest data out of China adding to that negative sentiment. As a result, gold is likely to continue drifting downward but in a slow and steady manner rather than a price plunge.
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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