Posted 20th June 2022

Gold Finds Sufficient Support from Flight to Haven Assets to Offset Aggressive Fed

gold bullion kinesis analysis

Gold starts a new week hovering around the $1,840 an ounce mark, a level that feels like the precious metal’s natural territory right now.

While ever rising interest rates are a strong negative driver for gold, the fact the price has rebounded back to its pre-Fed rate announcement just a few days later highlights the strength of the current major market mover: rising fears of a recession.

Live Gold Price – $/oz

At first glance, gold’s performance could be deemed unspectacular as this supposed haven asset has oscillated around $1,840 an ounce (admittedly in a fairly wide range) since the middle of May. However, given the sharp falls seen on other asset classes, standing still represents a good return. Certainly holders of gold will be much happier than owners of cryptocurrencies.

Later this week we have the latest inflation data out from the UK and Canada, both of which are expected to show price pressures are continuing to rise, while everyone will be paying close attention to Federal Reserve Chair Jerome Powell when he speaks to try and predict the trajectory of the US central bank’s next rate moves following last week’s biggest rate hike in almost 30 years.

For central banks, striking the right balance between sufficient action to curb inflation while not choking economic growth is proving an almost impossible job to get right. 

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