Hopes of gold holding at the September lows have proven false with gold continuing to fall to be barely holding above $1,700 an ounce.
The inflation data out of the US earlier in the week confirmed fears that the rate of the consumer price rises is still yet to peak and emboldening the need for the Federal Reserve to issue further aggressive rate hikes later this month and in the subsequent months.
In this climate, the talk has moved on from the potential of another 75 basis point increase to the possibility of the Fed hiking by 100 basis points when it meets at the end of this month.
Live Gold Price – $/oz
Such sharp moves by the US central bank put gold under dual pressure as it typically sees the dollar strengthen as well as reducing the appeal of a non-yield bearing asset like gold.
Gold’s plunge has been pretty dramatic considering that it is typically less volatile than other asset classes yet it has seen about $100 wiped off its value so far in July. Investors will be clinging to the hope that $1,700 proves a threshold at which sufficient buying support kicks in to stem further declines. However, it was only a few weeks ago that similar thoughts were being said about $1,800, which ultimately offered up very little resistance.
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. This publication does not intend to provide investment, tax or legal advice on either a general or specific basis.v