Gold is drifting ever closer to $1,900 an ounce as all the talk is of more interest rate rises still to come on both sides of the Atlantic.
Today sees the heads of the Federal Reserve, the European Central Bank, the Bank of England and the Bank of Japan all speaking at the central bank forum in Portugal and this will shed more light on how hawkish the bankers still feel they need to be to well and truly curb inflation.
Gold is struggling to gain much support in the current macroeconomic environment with the prospect of more rate hikes dragging down the precious metal as it doesn’t deliver a yield, making other interest-bearing assets more attractive in its place.
The fact that gold hasn’t fallen further and still remains above $1,900 an ounce for the time being shows that the reluctance from investors to fully shift away from this haven asset. While interest rate hikes may be softening gold’s appeal, the concern that the aggressive stance of central banks will tip economies into recession has made gold’s decline very steady with investors wanting to keep onto their safety blanket for as long as possible while market confidence remains so fragile.
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