Today’s gold prices have held steady despite rising expectations for less aggressive Fed hikes this month.
Today’s peak price was just a hair below yesterday’s eight-month high when gold rose to $1,881 an ounce.
Although prices are down slightly at $1,874 an ounce this evening, they remain 0.22 percent higher than yesterday’s close price during the current trading session.
The US dollar is now weaker against other currencies following a strong 2022. This has led to the metal having an inverted relationship with the greenback.
The Fed is also expected to raise interest rates by 25-50 basis points next week, currently at 4.25-4.5 percent.
This is in contrast to the bullish central bank’s approach last year.
To combat inflation, the Fed quickly increased rates in autumn and winter. It peaked at 8.2 percent in September. The rate then dropped to 7.1% in November.
Similar: Oil Prices Drop on Unexpected Crude Stock Build
Investors have been attracted to gold because of its reputation as a safe investment that can be flown away in times of economic turmoil.
Rupert Rowling of Kinesis Money was a market analyst. He said that gold’s remarkable run continues, with the precious metal trading at its highest level in eight months. The combination of a weakening dollar and expectations that the Federal Reserve will end its large interest rate increases has created the perfect conditions for gold’s remarkable recovery, which began in November.
Gold recovers after September’s slump
Gold’s return is a result of the safe haven that gold has been sliding since last spring’s rally.
After Russia’s invasion in Ukraine in March, the metal rose to $2,043 an ounce. Investors have been drawn towards gold because of its volatility.
Prices rose through spring, but then dropped over the summer due to both the Fed’s firm response and spiralling inflation. Prices fell as low as $1627 in September, before stabilizing in the winter.
Rowling stated that the latest US inflation data will test the rally. He called it a “key reference” for investors and traders to evaluate the macroeconomic condition of the largest economy in the world.
He said: “The only concern about gold’s remarkable rally is that it was based on sentiment and not fact. Even though the Fed raised its benchmark rate in December, gold gained even though it was. It is expected to continue its gains even though the Fed will likely increase it again at its next meeting.
“It would therefore only take one or two data points that are negative or a surprise move from the Fed to cause an abrupt volte for gold.”
Craig Erlam was a senior market analyst at OANDA and wanted to know if there would be any corrections in future up swings.
He stated that the yellow metal is currently facing strong resistance at $1,880-$1,920. This region has seen a lot activity in recent years. The bulls still have momentum, but the price is testing the $40 range.