Gold continues to trade close to $2,000 an ounce even with the slight pullback this week following comments from a range of Federal Reserve officials reiterating the likelihood of more interest rate hikes still on the way to tackle high inflation.
Fed Bank of Cleveland President Loretta Mester was the latest hawkish voice by stating her support for another rate hike while keeping one eye on any ongoing fallout from last month’s US banking crisis. And it is this same issue that is keeping gold well supported even in the face of further rate hikes with investors favouring the asset thanks to its lack of counterparty risk and with the medium-term economic outlook still uncertain.
To put gold’s recent dip into perspective, even though the price has now lost most of its gains in April, it is still trading at a higher level than it did at any point from March 2022 to March this year. Even with at least one more Fed hike expected, gold looks to be well supported to continue trading at these elevated levels for a good while yet.
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