Gold Price Analysis – Gold Continues to Drop with Rising Rates

Gold Technical Analysis

The gold market has fallen below the crucial $4600 level, and it looks like we are in fact going lower. Interest rates in America continue to climb and that is a recipe for disaster for the gold market. Rallies at this point in time I would be very suspicious of unless we see the 10-year yield in America start to drop back towards the 4.30 level.

Ultimately, it looks like traders are trying to price in the idea of serious energy inflation. If that’s the case, then I think you have to look at this through the prism of suspicion anytime it rallies. This is a market that has to “prove itself” as we have seen the bulls burned more than once recently.

Yields and Federal Reserve Policy

With these rates being this tough and continuing to extend to the upside, I think you have to wonder whether or not gold isn’t going to fall to reach the 200-day EMA. I’m bearish on gold at the moment, no longer term structurally. I think it’s going much higher, but as things stand right now, people are so worried about the Middle East and the energy inflation picture that they are driving rates higher.

They think the Federal Reserve will be in a situation where the energy inflation component may keep them tighter for longer than anticipated. Tighter for longer is the story we’ve been talking about for 2 years, anyway. This is just the excuse. This is what they’re looking at at the moment. Ultimately, this is a very sensitive market to interest rates, and it does look very threatened at the moment.

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