UBP: Gold Downside Limited as Rate Hike Wave Nears End

Peter Kinsella, Head of UK Investment Services at Swiss private bank UBP, believes that the rate hike wave "looks almost complete now," leaving "only limited downside risks" for gold, which is likely to trade within a narrow range.

This comes after spot gold recorded around $4,079.42 per ounce, down 1.96% following hot US inflation data, according to IndexBox citing comments to Kitco News.

The bank believes market pricing for at least three additional 25-basis-point hikes each is exaggerated, meaning the greatest pressure on the metal has already been reflected in prices. It also highlighted a World Gold Council survey showing that a record 45% of central banks intend to increase their gold holdings.

Arab investors benefit from this reading when timing their market entry, as easing rate pressure reduces the holding cost of the metal and supports safe-haven demand amid a potential slowdown in monetary tightening.

What do these terms mean?

Basis points: A small unit of measurement for interest rates, where 100 basis points equal 1%, used to measure minor changes in interest rates.

Spot gold: The price of gold paid for immediate delivery in global markets, serving as the primary benchmark for pricing the metal.

Private bank: A bank providing wealth management and investment services to high-net-worth individuals and institutional clients, differing from general commercial banks.

Central banks: The institutions responsible for monetary policy and currency issuance in each country, whose gold purchases are a key driver of prices.