Gold is just about holding above $1,700 an ounce after the latest UK inflation data showed consumer prices are continuing to rise at their fastest pace in 40 years.
This persistently high inflation across the world is forcing central banks to increase interest rates on a monthly basis with the Federal Reserve set to implement another 75 basis point move when it meets next week while the Bank of England is mulling a 50 basis point hike. This environment of rising interest rates puts gold under pressure as its lack of yield makes it less attractive than those assets paying interest such as bonds.
Live Gold Price – $/oz
It was only a few weeks ago that gold was looking to $1,800 an ounce as a key support but such has been its fall from grace that $1,800 looks a distant memory with investors now hoping that there is stronger resistance at $1,700 to prevent further slides.
The hope will be that with the next moves by central banks now heavily expected and therefore priced in, the Fed’s likely 75 basis point hike next week won’t prove the negative catalyst to force gold below $1,700 and there remains sufficient support from factors such as rising inflation itself, concerns over economic growth and the continuing war in Ukraine to prevent further falls for gold.
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