• 3 minutes e-car sales collapse
  • 6 minutes America Is Exceptional in Its Political Divide
  • 11 minutes Perovskites, a ‘dirt cheap’ alternative to silicon, just got a lot more efficient
  • 12 hours Could Someone Give Me Insights on the Future of Renewable Energy?
  • 13 hours The United States produced more crude oil than any nation, at any time.
  • 12 hours How Far Have We Really Gotten With Alternative Energy
  • 12 hours "What’s In Store For Europe In 2023?" By the CIA (aka RFE/RL as a ruse to deceive readers)
  • 1 day Bankruptcy in the Industry
Is Gold Heading to $3,000?

Is Gold Heading to $3,000?

Gold has surged to a…

3 Reasons Gold Prices Continue To Climb

3 Reasons Gold Prices Continue To Climb

Gold prices continue to rise…

City A.M

City A.M

CityAM.com is the online presence of City A.M., London's first free daily business newspaper. Both platforms cover financial and business news as well as sport and…

More Info

Premium Content

Gold Prices Dip As Recession Fears Fade

  • Gold's status as a safe-haven asset wanes due to rising interest rates and an increased appetite for riskier investments.
  • Despite holding above the $1,900 mark since March, continued healthy employment and declining inflation in the US have shifted market perspectives.
  • Analysts highlight challenges for gold, including the continuous selling of exchange traded funds, with net outflows marking their lowest level since April 2020.
Gold Prices

The price of gold has weakened in the face of a strong US dollar, with investor sentiment shifting away from the precious metal as hopes of avoiding a recession rise.

It has started trading this week at $1,910 per ounce, falling by $30 per ounce in one week. It neared $2,000 per ounce last month.

The prospect of interest rates rising again in September combined with more appeal for riskier investment strategies means that gold’s appeal as a safe haven asset has diminished.

Fragile investor confidence has enabled gold to hold above the $1,900 threshold since March earlier this year, but economic data in the US – the world’s largest economy – shows employment remaining healthy and inflation tracking downward.

There is now revived expectations a global recession can be avoided amid hawkish responses from central banks to tame inflation – as reflected in easing prices.

Rupert Rowling, market analyst for Kinesis Money said: “In this environment of high interest rates and market confidence slowly flowing back to encourage a riskier approach among traders and investors, it is hard to see gold making any gains and instead the controlled slide downward looks set to continue.”

Commenting on future price moves, he argued it would be “interesting” to note investor reactions if prices drop below $1,900 per ounce.

“Given the underlying institutional support for the asset, this relative cheapness could prompt a fresh wave of buying from Asian buyers in particular and slow gold’s decline. If, however, there is a limited reaction, it would show that gold has fallen out of favour and the price will continue dropping,” he said.

Carsten Fritsch, commodity analyst at Commerzbank, also noted that gold is also facing another challenge from the continued selling of exchange traded funds.

Citing data from Bloomberg, he noted that net outflows were recently registered on 13 consecutive days, amounting to 37 tons during this period – with holdings decreasing to their lowest level since April 2020.

He said: “In other words, all the inflows since then – i.e. during the course of the coronavirus pandemic and following the outbreak of the Ukraine war – have been reversed again in the meantime. For the outflows to stop, the market’s remaining rate hike expectations need to disappear and give way to rate cut expectations. We expect this to happen in the fourth quarter.”


By Nicholas Earl via CityAM

More Top Reads From Oilprice.com:

Download The Free Oilprice App Today

Back to homepage

Leave a comment

Leave a comment

EXXON Mobil -0.35
Open57.81 Trading Vol.6.96M Previous Vol.241.7B
BUY 57.15
Sell 57.00
Oilprice - The No. 1 Source for Oil & Energy News