Gold is starting a new week showing signs of consolidating near $1,740 an ounce after last week’s spectacular fall.
Positive jobs numbers out of the US at the end of last week have provided members of the Federal Reserve with the necessary confirmation that the nation’s economy remains in good enough health to be able to cope with another 75 basis point rate hike later this month.
Later this week the June inflation figure for the US will be published with it forecast to come in higher than May’s print, illustrating the urgency in tackling inflation.
These inflationary pressures allied to the measures central banks are adopting to bring rising prices under control are the main factors in first gold’s failure to climb despite a risk-off market sentiment and then more recently its plunge to levels last seen in September.
Last week’s spectacular fall has left gold struggling for support but the lows achieved in September and August last year around $1,730 an ounce now looks a crucial support around which the precious metal can stabilize.
With another sizeable interest rate hike by the Fed now baked in, it is hard to see where gold can find support to climb significantly higher in the short-term so it is likely to remain comfortably below $1,800 an ounce.
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