Gold is treading water around $1,950 an ounce as investors remain tentative about the true health of the global economy and want to keep hold of their gold safety jacket for a while yet.
This scenario is likely to continue until next week’s highly anticipated Federal Reserve meeting where expectation is mounting that the US central bank will hit pause on its interest rate hikes. However, while recent rhetoric from senior officials, including Patrick Harker, has increased the likelihood of the Fed keeping its rate unchanged, investors and traders are reluctant to fully commit their funds until this does indeed prove accurate.
The fact that gold continues to trade at such high levels, that although they may be about $100 lower than gold’s early May peak, are still at a range seen only a handful of times in the precious metal’s long trading history, reflects the fragile state of market confidence. The aftershocks of March’s US banking crisis are still being felt so it will take a sustained run of positive economic data for confidence to be fully restored.
As such, the gold price looks set to slide slowly but steadily lower over the coming weeks and months, proving the barometer of investors’ true confidence in the global economic outlook.
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