Precious metal markets continued to slump this week, with the value of gold per troy ounce falling 6.53% against the US dollar over the past month and silver down 2.34% in 30 days. Amid raging global inflation and hawkish central banks, gold and silver prices have struggled in 2022, with investors expecting the exact opposite to happen.
The collapse in the value of precious metals will continue
The nominal US dollar value per troy ounce ofgold (Au)andsilver (Ag)has fallen between 0.18% (Au) and 0.27% (Ag) over the past 24 hours. Over the past 30 days, the gold price fell 6.531% against the U.S. dollar, while the silver price fell 2.34% against the greenback over the same time period.
The losses that the precious metal is dealing with are occurring while global inflation is spiraling out of control and the global economy is facing a turbulent market. In addition, the Federal Reserve raised its benchmark bank rate by 75 basis points (bps) last Wednesday, and the U.S. Dollar Currency Index (DXY) surged to a 20-year high the following Friday.
Bart Melek, global head of commodity market strategy at TD Securities,toldKitco News on Friday that the recent Fed rate hike is a net negative for gold.
“We saw a significant increase in market estimates of what the federal funds rate will be next year, which is a pretty big difference from a month ago and consistent with the Fed being more aggressive,” said Melek, a commodity market strategist at TD Securities. TD Securities commodity market strategists add:
Real interest rates are rising. That is a negative for gold. High carry costs and high opportunity costs will probably drive capital away.
Daily moving averages for silver and gold signal “bearish”; analysts see gold “rebounding next year”
Rashad Hajiyev, a strategist at RM Capital Analytics, believes gold prices should go higher. Last week, the analyst predicted a rebound as gold trended lower against the U.S. dollar.
Hajiyevtweetedlast Tuesday that “If the recent sell-off is a breakdown, gold should trade above $1690 within 1-2 days.” Gold is holding around key support&. GDX’s 1.75% gain yesterday amid a flat gold price suggests the metal is on the cusp of a major rally.” Six days after Hajiyev’s tweet, gold has not shown any significant upward movement.
Gold reserves fell from 20,000 tons to 8,000 tons as European governments exchanged dollars for gold while the US kept the gold price artificially low at $35/oz.
The same is happening now with gold and silver moving to China& India as the Comex & LBMA has kept the price artificially low. pic.twitter.com/wgr3zJTh5J
– Wall Street Silver (@WallStreetSilv) . Sep 18, 2022
“For 2023, the outlook for gold prices is more positive,” Jain detailed.” Not only is the dollar expected to weaken, but the Fed is also expected to begin cutting interest rates in 2023. On top of that, real yields in the U.S. are also expected to decline. As a result, gold prices are likely to rebound next year or sooner.”
A Sundayprice analysis covering both gold and silver prices at schiffgold.comexplains that the daily moving averages (DMAs) of both precious metals are showing bearish signals. This analysis notes that silver is holding up better than gold, but that precious metals have “ real resistance” at 22 nominal U.S. dollars per troy ounce.
“[On gold] it is bearish that the 50 DMA ($1743) is well below the 200 DMA ($1831). However, markets rarely go in one direction without pausing.” The analyst wrote.” Expect a short-term bounce. Until the current price ($1655) breaks through at least the 50 DMA and more likely the 50 DMA needs to break through the 200 DMA to confirm a new bullish trend, a bounce cannot be trusted.” He writes.
What do you think about the recent market performance of gold and silver? Do you expect precious metals to rise from here or fall more? Let us know your thoughts in the comments section below.
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