The gold market has been positive after initially gapping lower on Wednesday as interest rates have calmed down a bit
But let's be honest, the interest rate market is just showing there's a serious problem and interest rates are likely to continue to see upward pressure before it's all said and done.
I think a lot of people are starting to price in the idea of something pretty serious coming down the road.
That more likely than not will be supply chain disruptions, which means massive inflation, probably what is known as rolling inflation.
Rolling Inflation and Bond Markets
That rolling inflation will show up in different places, but the one place it shows up fairly consistently will be the bond markets. We are waiting to see some type of solution to the mess that's been created in the Middle East, and we're just not seeing it. And as long as that's going to be the case, there is a lot of concerns about energy shocks, things like that.
Top Regulated Brokers
And in that environment, it's easier for a large manager to simply put money into paper, bonds, getting a guaranteed 4.6% return or whatever, than it is to throw it into a market like gold, which is typically choppy and volatile anyway.
So, with that being the case, I think you have to look at this through the prism of a market that I think quite frankly is exhausted. And it still sees the $4600 level above as a bit of a ceiling. Now if we see the 10-year really start to fall apart, then maybe we see the gold market react positively in kind.
That's certainly been the correlation, but right now I don't trust this candlestick at least not quite yet for the Wednesday session.
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