According to a report by economists at ANZ Bank, the price of gold has stabilized after reaching a recent high, primarily influenced by a stronger US Dollar and increasing yields. The positive labor data and persistent inflationary pressures indicate the possibility of further tightening of interest rates, which should not be dismissed.
The recent surge in the value of the US Dollar resulted in a decline in the price of gold, erasing some of its previous gains. The combination of historically low unemployment rates and high inflation levels suggests that there is still a possibility of interest rates being tightened. However, it is worth noting that the yield curve inversion, which typically indicates an impending recession, could potentially lead to a pause or even cuts in rate increases in the future.
Despite the slowdown in investor allocations to gold during April, the overall sentiment remains positive. Central banks have continued to add gold to their reserves, indicating their confidence in the precious metal. Moreover, there is strong physical demand for gold, even at record prices.
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