The gold market fell most of the trading session on Tuesday as we continue to see a lot of noisy behavior overall as interest rates in America continue to rise quite rapidly.
That of course is toxic for precious metals as they are non-yielding assets, so gold of course took a little bit of a beating.
With that being said, I like the idea of simply watching the 10-year yield to see what it is doing, and right now it's going straight up in the air.
That means gold will continue to struggle. Given enough time, we could seriously break down if this doesn't stop, and it's obvious to me at least that the interest rate situation in America is not getting better. And in fact, until we get some type of clarity coming out of the Middle East, I think that will continue to be the case.
Pricing In Energy Inflation
The markets are pricing in energy inflation. If we can break above the $4,600 level, that would be bullish for gold. I think at that point you'd have to wait and see whether or not interest rates drop concurrently with that move above $4,600, then you might have something you can believe in when it comes to gold.
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If we break down from here, the 200-day EMA gets targeted next, and that wouldn't surprise me at all to see that happen in this environment.
We are seeing a ramp-up in the 10-year yield, and that of course shows that traders are very concerned. Gold is not a safety asset, I know you've been told that, but it really isn't, it's a non-yielding asset. That's more important at the moment.
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