Gold price dipped and is consolidating, leaving investors questioning its future. What’s next for the precious metal?
The attraction of gold has remained steadfast throughout history, and its status as a haven during times of uncertainty has never been more apparent than in recent years. From the COVID-19 pandemic to Russia’s invasion of Ukraine and the collapse of banks in the US and Europe, gold has consistently proved its worth by soaring to new highs.
During the Russia-Ukraine conflict, we saw gold embark on a sprint bull rally to touch levels we had seen during the COVID-19 pandemic. It did reach close but couldn’t surpass the historical COVID-19 levels. Instead, we saw it hit a high of $1,988 per ounce. However, in March 2023, gold prices hit a new high of $2,003 per ounce, and the rally continued to $2,046 per ounce when the chaos of Signature Bank collapse spread fears among investors and the weakening of the dollar index, making gold shine brighter.
Yet, as we look to the present, we have seen gold prices have fallen from highs and are now consolidating, and it is trading range bound. We saw a dip in gold because the US economic data was stronger than expected and indicated further economic strength, potentially forcing the Federal Reserve to keep rates higher for longer.
Apart from this, the head of the Bank of International Settlements has said that the rate may need to stay higher and longer than previously thought as inflation is still challenging.
Moreover, according to a Reuters report, ECB policymakers are converging on a 25 basis points rate hike in May 2023 is also weighing on the gold market.
In 2023, gold has shined bright, and as of 20th April 2023, the precious metal has delivered a remarkable return of 22.95% in the last six months alone.
Moreover, Akshaya Tritiya is just around the corner; how the market sentiment for gold will likely unfold in India is worth observing.
*The article is for information only. This is not investment advice.