Gold Price Analysis – Gold Continues to Watch Rate Markets

Gold Technical Analysis

Gold markets rallied right off the bat to test the $4,600 level but have rolled over again for the exact same reason we continue to struggle, and that’s interest rates rising in the United States. With that being the case, I think you have to look at this as a market that is going to continue to be very noisy, very choppy, and unfortunately, very headline-driven. The bond markets are signaling there’s something seriously wrong, and as long as that’s the scenario that we find ourselves in out there, it’s difficult for gold to truly take off.

Risk Assets and Safety

Yes, I know you’ve heard that gold is a safety asset, and it is in certain situations, but right now you’re learning that it is not always. The interest rate situation means that it’s easier to earn a return simply by buying bonds instead of dealing with a non-yielding asset such as gold or silver. This has been the pattern for some time now.

If we break below the low of the Monday session, that could open up a move down to the 200-day EMA, but we’ll just have to wait and see whether or not that actually ends up being a possibility. If we can break above the $4,600 level, then we could go looking to the 50-day EMA at $4,715. All things being equal, you’ll have to watch that 10-year yield in the United States because that is a major negative correlation. As it rises, it puts downward pressure on gold.

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