Forex Signal Bullish

Gold Prices Set for Biggest Monthly Gain in Four on Expectations of Rate Hike Lull

Gold prices are on track for their biggest monthly gain in four as expectations grow that major global central banks may be nearing the end of their current monetary policy tightening cycles.

Spot gold is up about 1.8% in July, and is trading near $1,955 per ounce. U.S. gold futures are also up about 1.8%, and are trading near $1,954 per ounce.

The recent gains in gold prices have been driven by a number of factors, including:

  • Expectations that the Federal Reserve will soon begin to taper its rate hikes. The Fed raised interest rates by 75 basis points in June, but many economists believe that the central bank will start to slow the pace of its hikes in the coming months.
  • Weaker economic data out of the United States. Recent economic data has shown that the U.S. economy is slowing down, which has raised concerns about the need for the Fed to continue raising interest rates.
  • Geopolitical uncertainty. The ongoing war in Ukraine and the threat of a recession in China have also boosted demand for gold as a safe haven asset.

If expectations of a rate hike lull continue, gold prices could continue to rise in the coming months. However, if the Fed surprises markets and raises interest rates more aggressively than expected, gold prices could come under pressure.

In addition to gold, other precious metals are also set to post monthly gains in July. Spot silver is up about 6.5%, platinum is up about 0.1%, and palladium is up about 0.3%.

The gains in precious metals have been driven by the same factors that have boosted gold prices. However, precious metals are also sensitive to the demand for industrial metals, and any slowdown in global economic growth could weigh on prices.