Gold continues to be very noisy at the moment, as we are looking at this market with falling rates in early Thursday trading. This has helped remove some of the short-term headwinds.
Gold
The gold market gapped a little bit higher to the upside to kick off the Thursday trading session and has since rallied a bit.
All things being equal, this is a market that is moving on interest rates, which have fallen in the United States during the session. Now, the question is going to be: Is this a long-term turnaround in interest rates, or is this something more akin to the fact that people are running away from higher-risk assets and running to bonds for safety? I think the latter of the two makes the most sense because we've seen the Kospi in South Korea absolutely crumble overnight
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Running from risk at the moment
The Kospi in South Korea lost about 8%, while the Nikkei dropped about 5%. Most of this was damage to the semiconductor sector and the AI trade. So, if people are running into bonds in America and bringing down yields, then it gives a little bit of relief to gold in an area that, quite frankly, should see some support. Between the $4,200 level and $4,000 is massive demand.
I think this is an area where a bounce makes sense. Whether or not it is sustainable is a completely different question. If we can break above the $4,250 level, I might be a little bit more impressed, but I think we are in somewhat of a holding pattern at the moment as we are trying to figure out what to do next.
I am not necessarily calling for a massive move to the upside, but I do think gold has shown its resiliency, and that is something worth paying close attention to.
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