Precious metals including gold and silver are rebounding amid growing expectations the Federal Reserve (the Fed) will ease its aggressive policy of hiking interest rates.
This has eased pressure on gold and silver with expectations November may be the central’s bank final hefty rate hike, with chair Jerome Powell likely to pursue a more conservative agenda over the following months.
Gold is now up 2.23 per cent for the week, and is currently trading at $1,672 per ounce.
This is way below its peak this spring, when prices rallied to $2,034 per ounce in March after Russia’s invasion of Ukraine – however it is comfortably above last month’s nadir of $1,627 per ounce.
Prices have been propped up by resilient demand in Asia, which has prevented a slide below the $1,600 threshold.
With inflation easing, there is hope investors will reappraise the asset, however any rallies will likely be contained by contained by current economic conditions.
Rupert Rowling, market analyst at Kinesis Money described gold’s gains as “steady rather than spectacular”, and that moves in prices were chiefly based on “sentiment” rather than material changes in the market.
He said: “Given gold’s lack of yield, the environment of rising rates makes other interest-paying assets more attractive and provides a firm ceiling on how high gold can climb.”
Meanwhile silver is closing in on $20 per ounce at $19.66 – its highest levels since early October.
While investors remain conflicted over gold, Rowling argued the easing of rates has provided “sufficient light relief for the price to recover most of the ground it had lost over October.”
Forecasting future price moves, he said: ” It will be interesting to see silver’s price reaction as and when it breaches $20 an ounce as while the fundamental picture points to a metal in strong demand, the price has failed to match up to this and instead found stubborn resistance between $20 to $21 an ounce due to the Fed’s interest rate outlook.”