What to Know
- Rising global interest rates continue to pressure gold and silver.
- Gold trades between $4,500 and its 200-day EMA amid elevated uncertainty.
- Gold may have formed a lower high as inflation expectations weigh on demand.
- Silver remains range-bound between $65 and $70.
- Silver could continue to lag gold as it lacks the same safe-haven appeal.
The backdrop right now is looking very noisy as we continue to see interest rates rise around the world. And of course, we have a lot of different things going on as the central banks around the world will perhaps be having to fight that inflationary headwind coming out of the oil markets.
Energy rising certainly puts a lot of pressure on certain central banks at the moment, not the least of which would be the ECB and the Federal Reserve.
The ECB is expected to raise rates during the Thursday session. The Federal Reserve is expected to raise rates by a 60% vote on Wednesday. At least that's what the market's pricing in.
Gold
With that being said, gold finds itself in a tight range between $4,500 and the 200-day EMA, and it is likely that we will continue to see a lot of noise in this area, as traders really have to pay close attention to things like oil headlines and central bank actions.
Ultimately, this is a market that, longer term, has been bullish, but you have to start asking questions. Did we just make a lower high? This would be a big question to answer at the moment.
There's a lot of uncertainty out there. Gold is not getting the traditional safe-haven bid because, ironically enough, the noise coming out of the Middle East that is driving oil higher is driving inflation higher.
So even though it is a very risk-appetite-destructive event, the reality is yields based on inflation expectations continue to be a headwind for gold.
Silver
The silver market is very much the same scenario here. We do have the 50-day EMA trying to break above the 200-day EMA. We'll just have to wait and see if that actually plays out.
But that being said, this is a market that I think is more or less short-term range-bound between $65 and $70. This area has been somewhat reliable recently, and with the uncertainty around all of the news coming, it makes sense that we focus on a tight range like this.
Again, it's all the same catalyst as the inflationary headwinds out there and the central banks that are likely to continue to feel the pressure to raise rates, and therefore non-yielding assets like silver could suffer.
Silver does have long-term demand. Silver doesn't necessarily have the safe-haven appeal that gold does, so quite frankly it wouldn't surprise me at all to see silver lag gold.
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