Gold has finally fallen back below $1,900 an ounce under pressure from a strong US dollar and the sustained impact of high-interest rates that look set to stay higher for longer.
The surprise is not that gold has fallen below this threshold but the length of time it managed to remain at such elevated levels given the macroeconomic environment.
It will be interesting to note gold’s reaction over the coming days as from a purely macroeconomic perspective the price still looks overly high.
The main element that has kept gold supported in recent months has been the strength of institutional buying, particularly from central banks seeking to diversify away from the dollar.
Given that this is a long-term trend, there is no reason to believe this support will suddenly disappear and therefore any decline is likely to be slow and gradual rather than a sudden collapse.
Also with fresh jitters over the health of the Chinese economy amid the Evergrande property turmoil, a return for gold above $1,900 can’t be ruled as investors seek out the precious metal’s haven qualities.
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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