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Gold rebounds to $1,800 amid speculation of retaining low-interest rates

Gold rebounds to $1,800 amid speculation of retaining low-interest rates

The price of gold rebounded to $1,800 on Friday morning, backed by speculations that central banks might retain low-interest rates. The rebound ended gold’s weekly decline.  

Spot gold surged 0.3% to $1,800.40 per ounce while the U.S. gold futures gained 0.1% to $1,802.10. For the week, spot gold is down 1.4%.

Elsewhere, Silver was up 0.5%, trading at $24.20 an ounce. However, the precious metal is down 2% this week. Platinum has also made gains of 0.4%, trading at $981.19, but is down almost 4% on a weekly basis. 

Palladium was also on a recovery path, surging 0.5% to trade at $2,189.33 but down 9% for the week.

Precious metal weekly chart.

Low interest rates on gold’s price

Gold’s slight recovery also follows the dollar’s weakening, making the precious metal the perfect asset for holding at the moment. 

Historically, gold has benefitted from a low-interest environment, and the next action by the Federal Reserve will be instrumental in the precious metal’s prospects. Currently, gold is attempting to attain another all-time above the $2,000 mark. 

At the moment, it is not clear about the Fed’s next course, although expectations are that the institution will retain a low-interest-rate environment. The projection emerges from a Fed report that showed the U.S. economy slowed in August amid high inflation. 

Jobless claims released on Thursday highlighted the decline in hiring impacted by labor shortages rather than weak demand for workers. At the same time, worries about the fast-spreading Delta variant have to some extent, helped limit the downside for gold. 

Gold to benefit from inflation pressure

With the prevailing inflationary environment, experts suggest that gold might become the key beneficiary. According to the president of Weber Global Management, Briton Hill with a sustained inflation pressure the precious metal could at some point trade at $20,000

He noted that investors always dash for inflation hedges and gold stands the best chance to benefit. 


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