Gold has slipped back below $2,000 an ounce following hawkish comments from Federal Reserve officials that hinted at the possibility of further interest rate hikes yet.
Gold had surged comfortably above this key threshold earlier in the month in part due to the expectation that the Fed would pause further increases to its benchmark rate in June. However, while a June pause is still likely, the comments by Lorrie Logan, John Williams and Raphael Bostic suggest further hikes can’t yet be ruled out with inflation still remaining well above the Fed’s 2% target.
This slight readjustment of the interest rate outlook has taken some of the shine off gold but the precious metal continues to trade at an elevated level that it has only reached a handful times in its long history. With the prospect of the US defaulting on its debt if an agreement can’t be reached to raise the ceiling and market confidence still very fragile after the shocks delivered earlier in the year by the collapse of three US banks, gold’s safe haven appeal and lack of counterparty risk still makes it an attractive asset to investors.
So while gold may now have lost its momentum to challenge the highs achieved earlier in the month, its price is unlikely to drop away markedly any time soon with plenty of supportive factors still in play.
Rupert is a Market Analyst for Kinesis Money, responsible for updating the community with insights and analysis on the gold and silver markets. He brings with him a breadth of experience in writing about energy and commodities having worked as an oil markets reporter and then precious metals reporter during the seven years he worked at Bloomberg News.
As well as market analysis, Rupert writes longer-form thought leadership pieces on topics ranging from carbon markets, the growth of renewable energy and the challenges of avoiding greenwash while investing sustainably.
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.
