Precious metals markets continue to flounder this week as gold’s value per troy ounce has slid by 6.53% in value against the U.S. dollar during the last month, while silver has shed 2.34% in 30 days. Investors expected the opposite, as gold and silver have suffered in the face of rising inflation and hawkish central bank policies.
Precious metals continue to lose value
Over the past 24hrs, the U.S. nominal dollar value per troy-ounce of gold and silver has declined between 0.18% and 0.27%. In the last 30 day, gold prices have fallen 6.531% versus the U.S. dollars, while silver has lost 2.34% compared to the greenback.
While global inflation is rampant, and markets are volatile around the globe, precious metals face losses. In addition, the U.S. Federal Reserve increased the benchmark bank interest rate by 75 basis point (bps) on Wednesday. The U.S. Dollar Currency Index rose to a record 20 year high Friday.
Bart Melek of TD Securities’ global head of commodities markets strategy stated to Kitco News Friday that the Fed rate rise has had a net effect on gold.
“We’ve seen significant increases in the markets’ estimates of what the federal funds rate will do over the next year. It is quite a big difference from a month ago, and it is in line with the Fed being more aggressive,” Melek said. Melek, TD Securities’ commodity market strategist, added:
Rates are on the rise. That’s negative for gold. The high costs of capital and the low chance cost will drive people away.
Silver and Gold Daily Moving Averages Signal ‘Bearish’ Sentiment, Analyst Believes Gold Will ‘Rebound Next Year’
RM Capital Analytics strategist Rashad Hajiyev believes gold’s price should be higher. Last week, the analyst expected a rebound following gold’s downtrend against the U.S. dollar.
“Gold should be trading above $1,690 within 1-2 days if the recent sell-off is a breakdown,” Hajiyev tweeted last Tuesday. “Gold holding around key support & GDX adding 1.75% yesterday on a flat gold price suggests that the metal is on the cusp of a major move higher.” Six days after Hajiyev’s tweet, gold has not seen a significant move higher.
The US maintained a low gold price at $35/oz. However, the US’s gold reserves dropped from 20,000 to 8,000 tonnes as European governments converted dollars into gold.
The same is happening now with gold and silver moving to China & India as Comex & LBMA keep prices artificially low. pic.twitter.com/wgr3zJTh5J
— Wall Street Silver (@WallStreetSilv) September 18, 2022
Financial advisor Renuka Jain told her 61,300 followers on Twitter that her firm expects gold’s value to rebound next year. Further, the advisor expects that the U.S. central banking will reduce rates by 2023.
“For 2023, the gold price outlook is more positive,” Jain detailed. “Not only do we expect the U.S. dollar to weaken, but we also expect the Fed to start cutting rates in 2023. Additionally, we anticipate lower U.S. real yields. As a result, gold prices are likely to rebound next year or even earlier.”
An analysis of the Sunday gold and silver price on schiffgold.com shows that both daily moving averages, or DMA, for these precious metals indicate bearish signals. The analysis notes that silver has held up better than gold but the precious metal has “real resistance” at 22 Nominal U.S. Dollars per troy ounce
“[For gold] it’s bearish that the 50 DMA ($1743) is well below the 200 DMA ($1831); however, the market rarely goes in one direction without a pause,” the analyst writes. “Expect a short-term bounce. The bounce cannot be trusted until the current price ($1655) at least breaches the 50 DMA and more likely the 50 DMA needs to break the 200 DMA to confirm a new bullish trend.”
Do you have any thoughts on the market’s recent performance of silver and gold? Is it possible for precious metals prices to continue rising or falling? We’d love to hear your opinions in the comment section.
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