The gold market continues to see a lot of headwinds from the bond markets, as rates in the USA, Germany, and the UK all contribute to some of the weakness in this commodity.
I also think that it is a market that is likely to continue to see the $4,600 level as being very important. I don't necessarily believe that it is a brick wall, but I do recognize that it is an area that has been important multiple times, and I do recognize that in this higher interest rate environment it is difficult for the gold price to go higher. This is something that unfortunately, has caused a lot of pain for retail traders who simply view gold as “safety.”
I know most of you have been told that gold is a safety play during times of war, and that can be true, but higher interest rates are much more damaging to the case for gold than anything else. After all, you get paid to hold paper or electronic paper as opposed to the storage of gold plus.
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Commercial Users and Liquidity
The other thing that retail traders don't typically think about is that commercials move the market quite a bit, commercial users, people who actually need to buy tons of gold.
With that being said, I think there are a lot of people looking for liquidity, selling gold to cover margin calls in other markets at the same time as well. This is common with larger portfolios and funds, as they are forced to chase performance via different markets.
This all leads at least in my estimation to gold struggling for a while. Once rates come down, that is ironically, probably after the war stops, then gold has a chance, but until then I think you continue to fade rallies.
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