High Interest Rates Set to Persist
7 June, 2023
As at 10am, AEST
Spot pricing for Gold $AU2945
Spot pricing for Silver $AU35.50
Spot pricing for Platinum $AU1567
Global consensus among various countries and industries indicates that interest rates will remain elevated as central banks, including the Federal Reserve (FED) and the Reserve Bank of Australia (RBA), continue their efforts to combat persistent inflation.
In a devastating response to mounting repayment stress among mortgage holders, the RBA announced yet another rate hike this week. Recent surveys revealed a significant increase from 25% to 40% in mortgage holders experiencing repayment difficulties or stress around their repayments.
However, as central banks rely on interest rate increases as their primary tool to tackle inflation, it is ultimately the consumers who bear the brunt of the consequences. While consumer goods inflation appears to be under control, the soaring costs of business services and energy pose ongoing challenges.
Recent discussions have also centred around wage increases and their correlation to business value. While wage hikes have been implemented across various industries to raise minimum wages, businesses facing reduced consumer spending and dwindling revenue streams are now seeking to ensure that the value they receive from wage increases continues to grow. These conversations suggest that Australia's robust employment conditions may become more uncertain in the years ahead.
Looking ahead, important data on CPI figures and optimism indexes are expected next week in the US. Further updates will be provided once these figures are announced.
In the realm of precious metals, Gold and Silver may have found support at recent lows. Gold encountered resistance at $1,945 per ounce but has since shown a strong recovery, currently trading at around $1,960 per ounce.
Analysing the 30-day charts, we observe this pattern of resistance and subsequent rebound.
30 days of Gold pricing (USD)
30 days of Silver pricing (USD)
*Not financial advice, please do your own research prior to any investment decisions you make.