Gold is sliding away from the highs achieved earlier in the month amid confidence that the US will reach an agreement on raising its debt ceiling, reducing the risk of a default by the world’s biggest economy.
Having climbed above $2,050 an ounce in early May, the price of gold lost around $100 before recovering slightly to now be trading around $1,965 an ounce. Gold came to the fore as the safe haven asset of choice following first the failure of some notable US banks and then more recently by the threat of a US debt default, but with both those risks now seemingly under control, gold has dropped back while equities have gained.
However, gold’s short-term downward trend is unlikely to be sustained for long with the precious metal likely to quickly find support as market confidence still remains very fragile. Investors’ moods may have picked up from the nadir reached earlier in the year, but it will take a series of positive economic data and encouraging rhetoric from global finance officials to see equities return to the bull markets enjoyed in previous years and ensure that gold still has a considerable defensive role to play in most investors’ portfolios.
So while the highs of earlier in the month are unlikely to be challenged, a drop below $1,900 an ounce for gold looks just as unlikely in the short term.
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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