- Gold Consolidates Amid Rate Hike Probability
- Continuing Instability Could Move Prices Higher
- Supply Disruption & Volatility Hitting Broader Market
Gold prices took a breath on Friday and eased off slightly. This comes as attention has turned in the market to the possible rate hikes to come from Jerome Powell and the Federal Reserve. This was the main catalyst for consolidation though there is still plenty of possibilities that prices will ramp up even higher depending on the Ukraine-Russia situation. Any further escalation here would almost certainly impact traders. In other commodities news, oil prices remain extremely high and other precious metals have had mixed fortunes with supply constraints coming into play.
Potential Rate Hikes Looking More Certain
The big driver of gold prices on Friday has been the increasingly likely move up in interest rates. This led to a dip in gold trading during the session of around 0.3% following on from a similar weakened demand on Thursday. The two-day downward run stems from Thursday’s inflation data. This noted that inflation roared even higher in February with the CPI at a 40-year high level.
This persistent growth in inflation makes it a near certainty that the Fed will move to increase interest rates next week. If there had been any doubt in the face of the ongoing conflict in Ukraine changing its course, the hot inflation data has again compounded the need for a rate hike. Gold finished the day just above $1,990 but remained on course for an overall weekly gain.
Still Room for Upward Movement
Despite the move lower in price to finish the week, there still remains the possibility of more movement in gold to the upside and above the $2,000 mark. This depends largely on the geopolitical landscape and the next actions between Russia and Ukraine. With the latest attempt at negotiations seemingly fruitless, it is possible that gold may move higher next week if aggression continues.
This would see gold work more in its safe haven capacity for which it is very well-known. Similar to assets like the US Dollar and some other precious metals, gold prices usually move higher in times of uncertainty as traders become increasingly risk-averse.
Mixed Fortunes for Other Precious Metals
While the price of oil continues to remain extremely high following the decision of the US and other western nations to stop using, or move away from their dependency on Russian oil, the week for other precious metals has been a mixed one. As with the stock market and other assets, this period has been increasingly volatile and unpredictable with more pronounced swings happening on an almost daily basis. This has not excluded precious metals where palladium prices rose almost 1% on Friday.
Silver prices were down slightly on Friday but still remain above the $25 while it has been a less than impressive week for platinum. The metal rose to end the week but is still left facing its biggest weekly decline since the end of 2020.