Gold and silver prices fall for the third consecutive session and are at their lowest in more than a month. The prices of base metals such as copper rise and the prices of precious metals such as gold fall when the economy is doing well. What happens when copper and gold prices spiral? Conditions are ripe for gold prices to rise, with high inflation and the collapse of the stock and bond markets. The strength of the dollar is weighing on precious metals, analysts said, causing gold to fall for the sixth consecutive session.
In today's markets, following a major 10-year rally in global bonds, yields are starting to rise, leading to downward pressure on metals. Gold prices soften for the second day on Tuesday, and the most active futures contract for the yellow metal marks another deal at its lowest levels in more than a week. At the moment, there is only one thing that gives hope to gold and silver bulls and that is the extreme readings of the DSI (daily sentiment index) and the COT that show that investors are extremely bearish on metals, both from a positioning and sentiment standpoint. Gold and silver prices saw a third consecutive decline on Tuesday, with both precious metals at their lowest level in more than a month.
As the purchasing power of most major fiat currencies declines, people increase their levels of demand for physical metals. Gold prices end up higher on Friday and silver rebounds at its lowest level in two years, but both precious metals record losses during the week. And these three factors are like the witches of Macbeth, who cast truly wicked spells on the metal market. Whether or not precious metals can continue to rise will depend on whether investors remain firm in their views on the possibility of a slowdown in the pace of Federal Reserve rate hikes.
Precious metals have historically been correlated with real long-term interest rates (interest rate minus inflation) and this is a fairly consistent indicator for short-term performance. Cryptocurrency investments have been specifically designed to mimic some of the positive characteristics of precious metals, without their drawbacks. Friday's bright metal closes higher, with the most active contract securing its longest weekly winning streak in more than seven months. Gold prices rise on Tuesday, with the intention of halting the longest losing streak of the yellow metal since the beginning of July.
