Gold fell on Wednesday, as interest rates in the USA continue to rise in general. With this, the clear pattern emerges that as the rates rise, the gold market continues to fall over. We are now below the crucial $4600 level.
GOLD
Gold has fallen again during the trading session on Wednesday as interest rates continue to make non-yielding assets essentially undesirable. At this point, we'll have to wait and see how that plays out, but with the 10-year now at 4.40, good luck kids, the gold market is probably going to be a very difficult place to live.
This isn't to say that we can't rally from here, and in fact, we have rallied from some of the worst levels, but the reality is that traders will continue to look at this as a non-yielding asset and punish it as such as the idea that the price you pay to hold gold as opposed to the return you get on paper will continue to be a major detrimental part of what's going on.
A Bullish Market Facing Inflationary Pressure
With that being said, I like the idea of essentially taking advantage of dips longer term, but I also recognize that eventually we have to somehow come to a conclusion. At this point, it looks like the conclusion is probably more along the lines of a drift lower, and until the 10-year yield drops below 4.30, I don't really want to own gold.
Longer term, I'm fine with it. It's a bullish market, I think it will return to that, but as we continue to see bond markets price in inflation, this is a major problem. And as such, you need to treat it as a very difficult and dangerous market to live in. In other words, if you do choose to trade, it must be small.