Posted 7th November 2022

Weaker Dollar Pushes Gold to Top End of Its Trading Range

market analysis gold

Gold is starting a new trading week near the top end of its recent range as it hangs on to Friday’s gain generated by a slight US dollar weakening. 

After last week’s busy week of interest rate increases, this week has a more geopolitical feel with COP27 and the US midterm elections the significant events. With neither likely to have a direct impact on gold, its price is likely to remain in its recent range either side of $1,650 an ounce with the relative strength or weakness of the dollar the main driver.

Today brings three Federal Reserve officials speaking at events and their words will be closely analysed for investors seeking insight into their position on how much further the US central bank will need to raise rates in the coming months. Expectation has cooled slightly that the Fed will unwind its rate hikes as soon as the start of next year so that downward pressure from high-interest rates will make it hard for gold to make significant gains.

While last week’s slight bounce underlined that there is still support for gold, the Fed’s interest rate trajectory is likely to keep $1,700 an ounce off the table for the precious metal. Equally, there is sufficient support, particularly from physical buyers in Asia, to keep prices above $1,600 an ounce with gold instead likely to continue its range-bound trading for the foreseeable future.

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