Posted 3rd October 2022

Gold Steadies Around $1,660 as Markets Assess Economic Outlook

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Gold is steadying around the $1,660 an ounce mark as the markets pause for breath awaiting the next significant market driver.

It is hard to see gold making material gains in the current macroeconomic environment with the Federal Reserve, and other central banks around the world, still fixed on a policy of continued interest rate hikes over the coming months to try and bring stubbornly high inflation down. In the face of rising interest rates, gold’s appeal is diminished with its lack of yield making interest-bearing assets such as bonds more attractive instead.

The latest US employment figures will be published at the end of this week which will give a pointer to the current health of the world’s largest economy and with it how much breathing space the Fed has to keep up with its large rate hikes without risking tipping the economy into recession. 

Before that key announcement, there will be the latest interest rate decision from the Australian central bank, with a 50 basis point increase expected, while throughout the week a slew of Fed officials will be speaking with each word scrutinized for any indication of how hard and for how long the next and future interest rate moves will be, and with that, what the impact on gold will be.

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