Gold and Silver Consolidate as Interest Rates Limit Upside Potential

What to Know

• Interest rate expectations continue to drive gold and silver prices.
• Higher yields reduce the appeal of non-yielding precious metals.
• Gold remains trapped between the 200-day EMA and the 50-day EMA near $4,600.
• Silver faces resistance around $80 while maintaining support near $70.
• Long-term supply constraints remain supportive for silver prices.
• Traders continue to monitor Middle East developments and US rate expectations.

The backdrop right now for the precious metals market is kind of interesting because the interest rate markets has such a major influence on where we go next. And of course, we have to watch whether or not interest rates in the United States start to climb.

They will climb occasionally due to concerns and fears coming out of the Middle East, and that has been a major problem for both gold and silver. Higher interest rates make non-yielding metals not very attractive for those who are moving large amounts of money. That will continue to be the case, but eventually I am bullish on both of these metals for a couple of different reasons.

Gold

In the gold market, we have seen a little bit of choppiness as interest rates have flattened out in the last couple of days. We at least are trying to stabilize, and I think gold longer term is a very bullish market because of what I see down the road as probably interest rates being cut.

We’re nowhere near that right now, and with all of the uncertainty, that is on hold, but eventually I think that’s where we go. Inflation will have to calm down, so that has put the longer-term gold rally on hold. In the short term, I think we bounce around between the 200-day EMA underneath and the 50-day EMA above, which is just above the crucial $4,600 level, an area that’s caused quite a bit of noise.

Silver

The silver market tried to break above the 50-day EMA during the trading session on Tuesday, but has given back those gains, and right now I think things are just lackluster. I think silver is very similar to gold in the sense that it will go sideways.

Now, I think longer term, silver probably has a very high ceiling due to the lack of supply for the massive amount of demand out there. And as long as that remains the same scenario, and it’s not like we can just start digging for more silver quickly, I think there’s an underlying bid to this market.

The $70 level right now is your floor, with a 200-day EMA sitting underneath there. The $80 level above, short-term resistance. We’re in a longer-term consolidation area between $70 on bottom and $90 at the top. I am a buyer of dips, but I also recognize there will be a lot of noise here.

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