Gold is hovering around $1,930 an ounce with the price drifting as traders and investors await the Federal Reserve’s interest rate decision later today.
While a pause is widely anticipated, attention will be focused on Fed Chair Jerome Powell’s comments that will follow the interest rate announcement to see whether this is indeed the peak of US interest rates and how soon any potential cut will be.
Gold has shown remarkable resilience to still be trading so comfortably above $1,900 an ounce, a threshold that the precious metal has only surpassed a handful of times in its long trading history, given how high-interest rates have climbed around the world. Add in the strength of the US dollar in the last few months and it is hard to square how gold still finds itself in such elevated levels.
One factor likely to be keeping gold so well supported is central banks, particularly those of emerging economies, bolstering their holdings of the precious metal as part of a broader trend to diversify away from the US dollar hegemony. Certainly, the sustained strength of the gold price points to significant institutional involvement.
The high gold price also points to a lack of conviction among traders and investors to fully back a risk-on approach in the face of a stream of supportive economic data with people still preferring to keep some gold amid a more cautious trading approach.
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.
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