Gold is holding above $1,900 an ounce as a weakening in the US dollar helped keep the price at these elevated levels.
The big question on all investors and traders’ minds is how soon the Federal Reserve will stop its series of interest rate hikes. As such, the words of three senior Fed officials speaking later today will be closely scrutinised for any hints on when that pause might come.
Signs that inflation has peaked in the UK as well as the US help ease the pressure on central banks to keep on raising rates, which will be supportive for gold given that the precious metal typically struggles during periods of high interest rates as its lack of yield makes other interest-bearing assets more favourable instead.
As well as the speeches from Fed officials, today also brings the latest US Producer Price Index number which will be another important data point for the US central bank in determining how bold it will need to be when the committee meets at the end of the month.
Certainly, the recent indicators point to inflation receding but Fed officials have been at pains to stress the need to properly tame fast-rising consumer prices before they let up on rate hikes. The fact that gold has continued to make gains despite these cautious notes from the Fed underlines the strength of support that has built up for the precious metal and also indicates that investors are already looking beyond the end of the rate-hike environment. As a result, any data or move by central banks that falls outside of this narrative could see gold come stumbling down.
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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