Gold is holding at around $1,915 an ounce after yesterday’s drop as sentiment turned more optimistic on equities markets.
This week has been filled with interest rate decisions from central banks, with the Federal Reserve, the Bank of England and the European Central Bank all hiking their benchmark rates in line with market expectations. As such, the position for gold is little changed from where it was at the start of the week with the expected moves by these three major central banks long since priced in.
The main driver on markets this week was not the moves themselves but the commentaries that supported them with traders extrapolating from the remarks of the central bankers that the end to the rate hike cycle is drawing near, even though all three banks were at pains to reiterate that more hikes are still needed. Gold was a casualty in the short-term with investors piling into equities in this more optimistic environment but is still likely to be a beneficiary in the medium-term given that gold with its lack of yield is less attractive at times of rising interest rates.
Later today brings the next key data point with the release of the latest US jobs data. With US inflation now clearly having peaked, investors will want to see that the world’s largest economy remains in good health to enable the Fed to remain less aggressive at its next interest rate meeting. For now, gold has survived the main threat to maintaining its elevated price but will need the data to keep on supporting it for the on the ground reality to catch up with a price that is reflective of a period sometime in the future.
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.
This publication is for informational purposes only and is not intended to be a solicitation, offering or recommendation of any security, commodity, derivative, investment management service or advisory service and is not commodity trading advice. This publication does not intend to provide investment, tax or legal advice on either a general or specific basis