Gold prices have eased past £1,637 ($2,000) for the second time this week, trading at £1,642 ($2,006) late yesterday (Thursday) afternoon. The push forward comes after the Federal Reserve indicated that it may be about to pivot away from consecutive rate hikes following the collapse of Silicon Valley Bank and subsequent turmoil in the banking sector.
Chairman Powell made a significant admission when speaking to reporters, with a clear change in tone around rate hikes and inflation. He said, “We no longer state that ongoing rate increases will be needed to quell inflation … Events in the banking system over the past two weeks are likely to result in tighter credit conditions for households and businesses, which would, in turn, affect economic outcomes.”
Many on Wall Street consider this to mean that rate hikes will be paused due to financial uncertainty. This has created a positive environment for gold, which always shines brightly as a safe play during political and economic unrest.
Nicky Shiels, the head of metals strategy at MKS Pamp says concern around the finance sector has lit a fire under gold prices, “There’s been a notable flight to quality bid across classic safe havens like gold and U.S. Treasuries. Gold has surged through £1,637/oz ($2000/oz), from only £1,474/oz ($1800/oz). We continue to think the Silicon Valley Bank failure is a new catalyst and a game-changer for gold as it officially confirms that the Fed has broken something more important and closer to home.”
Daniel Ghali, senior commodities strategist at Canadian investment bank TD Securities agrees with this assessment, noting “The balance of risks in gold remains to the upside, with a CTA buying activity potentially supporting prices north of £1,637/oz ($2,000/oz). A subsequent break north of the £1,662/oz ($2,030/oz) range would catalyse a substantial CTA buying program.”
Edward Moya, senior market analyst at OANDA goes further, saying that this could now push gold to a record breaking level. He said, “Gold is becoming a favourite trade on Wall Street as many traders remain nervous post-Fed and over how quickly will U.S. authorities be able to contain further banking turmoil. Gold is going to shine here, and it seems positioned to find a home above the £1,637 ($2,000) level. A run to record territory is not that far away.”
With experts in agreement that gold prices are ascending and may never look back, don’t miss your opportunity to capitalise. Buy now.
