Posted 25th July 2022

Gold Confirms Signs of Stabilisation but How Long That Lasts is Down to Fed’s Latest Move

gold bullion bar stack

Gold is starting a new week by confirming the signs of stabilisation seen at the end of last week with it continuing to trade in the mid $1,720s an ounce.

How long this period of stabilisation lasts will be down to the market reaction to the Federal Reserve’s latest interest rate announcement on Wednesday.

By now a 75 basis point hike seems all but certain so while there is bound to be an immediate price move following the release of the figure, the hope for gold investors will be that the move has already been priced in and that the gold price can hold around its current levels.

Live Gold Price – $/oz

July has proven to be a tough month for gold with the dual pressures of rising interest rates reducing gold’s appeal due to its lack of yield. In particular the hawkish policies of the Fed have resulted in the US dollar strengthening to near record levels which has increased the negative environment for gold given its typically inverse correlation with the greenback.

The final week of July brings the prospect of further pain still with the Fed’s latest decision but if gold can survive the week largely intact, then the hope will be that inflation figures will finally show signs of having peaked and therefore the central banks can tone down the aggressiveness of their actions, giving gold breathing space over the course of the second half of the year

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