With the Gold price nosedive from its peak in March 2022 when it broke the 2,000 level, prices have diminished by around 20% and are currently trading almost unchanged on the Asia-Pacific trading day.
It has been a disappointing year for gold bugs, especially despite the tenacious inflation that boosted its bullish prospects in the eyes of many. However, a stronger resolve from the Federal Reserve in its struggle against inflation has tempered the trade.
The Federal Reserve will stop at nothing to achieve price stability, as they are resilient in ensuring economic stability. Despite failed attempts by investors to predict the turnaround point, market bets for the FOMC’s rate hikes appear maxed out.
Amidst uncertainties, some significant signs in the market suggest XAU has put its bottom, showing a turning point in bullion’s sentiment. Also, if hunger for government bonds returns as markets conclude that the Fed’s rate hiking cycle is near its peak, yields are likely to diminish.
Gold, a non-interest-bearing asset, would then be facing a much-improved backdrop, giving the yellow metal the possibility of shining again.