Gold and Silver Thumbs Higher in Hope Fed Will Slow Hikes

Precious metals, including gold and silver, are rebounding on growing expectations that the Federal Reserve (Fed) will ease its aggressive rate hike policy.

This eased pressure on gold and silver with expectations that November could be the central bank’s last rate hike, with Chairman Jerome Powell likely to pursue a more conservative agenda over the following months.

Gold is now on the rise 2.23% for the weekand is currently trading at $1,672 an ounce.

That’s well below its peak this spring, when prices soared to $2,034 an ounce in March after Russia invaded Ukraine – but it’s comfortably above the month’s nadir. last $1,627 an ounce.

The prices have supported by resilient demand in Asiawhich prevented a drop below the $1,600 level.

With inflation falling, there is hope that investors will revalue the asset, however, any rally will likely be contained by current economic conditions.

Rupert Rowling, market analyst at Kinesis Money, described gold’s gains as “steady rather than dramatic”, and price movements were mostly based on “sentiment” rather than material changes in the market.

He said: “Given gold’s lack of returns, the rising rate environment makes other interest-paying assets more attractive and provides a firm cap on how high gold can climb.”

Meanwhile, silver is closing in on $20 an ounce at $19.66 – its highest levels since early October.

As investors remain conflicted over gold, Rowling argued that the rate easing provided “much relief enough for the price to recoup most of the ground it lost in October.”

Forecasting future price movements, he said: “It will be interesting to see the reaction of silver price as it breaks through $20 an ounce because if the fundamental picture indicates that the metal is in high demand, price has not matched this and has instead found stubborn resistance between $20 and $21 an ounce due to the Fed’s interest rate outlook.

CityAM

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