The gold market has been negative during most of the trading session on Friday as interest rates have skyrocketed in the United States.
Breaking down below the $4,600 level of course is a very negative turn of events, but I think now we’re actually starting to focus more on the $4,500 level.
The $4,500 level is an area that’s offered support previously, and at this point, I think as long as we can stay above there, we still have a fighting chance.
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With interest rates in America shooting straight up in the air like they have, it really is starting to hurt gold and multiple other assets as well. Ultimately, this is a market that I think will try to figure out a way to jump to the upside as the longer-term outlook for gold I believe remains strong.
Geopolitical Concerns and Interest Rate Pressure
I also recognize that until the rates calm down, there’s just no real way for gold to continue to the upside with any real strength. With that being the case, I look at this as a market that will remain very noisy. Of course, heading into the weekend we have to worry about potential nonsensical headlines coming out of the Middle East on the latest whims of somebody either tweeting or perhaps putting a press conference out.
It looks like the United States and Iran are nowhere near trying to work things out, and as long as that’s the case, you have a serious problem when it comes to potential energy inflation which is going to cause a lot of issues for non-yielding assets such as precious metals. While I do like gold longer-term, I just don’t like it that much right now, at least not without some type of interest rate relief. Pay attention to the 10-year yield in America.
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