Gold is holding firm at just under $1,840 an ounce as the price looks to consolidate after its recent climb to its highest level for six months.
Today brings the latest non-farm payrolls data out of the US which will be another important reference point to see how the world’s largest economy is faring in the face of rising interest rates from the Federal Reserve and high inflation. The hope is that the jobs data will show that employment is still holding up sufficiently robustly to give the Fed more wiggle room when it next meets to decide on interest rates.
Recent comments from Fed officials point to further rate increases required, potentially up to 5%, to effectively curb inflation that while it may have peaked, still remains comfortably above the Fed’s 2% target. Given this macroeconomic backdrop, it seems remarkable that gold is still looking up and able to build on its impressive price recovery since the start of November.
The prospect of higher interest rates was a key factor in gold’s slide in the earlier part of 2022 yet with more rate hikes still likely, gold is testing levels last seen in June. This points to the broad uncertainty across markets with investors fearful of putting too much money in equities after a torrid 2022 while the spectacular collapse of FTX reminded everyone of the vulnerability of cryptocurrencies as an investment prospect. In the absence of stronger alternatives to place money, gold is proving to be a reliable home.
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.