Gold is holding around $1,720 an ounce, illustrating that this is the natural threshold for the precious metal having stabilised in the region after a brutal plunge earlier in the month.
How long gold continues to hold around its current levels after this short-term stabilisation will be largely defined by the market reaction to the Federal Reserve’s latest interest rate decision later today.
As the overwhelming expectation is for the Fed to implement a second consecutive 75-basis point hike, the likelihood that after an initial period of volatility immediately following the announcement, prices across the majority of markets will largely settle back to where they are now with the news long-since priced in.
The concern for gold investors will be that a similar scenario was in play at the start of this month yet that didn’t prove sufficient to prevent a drop of $100 in a matter of days. The counter-argument is that with gold a natural hedge against inflation, the war in Ukraine showing no sign of easing and fears over a recession, there is a strong enough support at gold’s current price to ensure it holds above $1,700 later today.
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.