Gold Price Forecast – Gold Markets Get Hammered

Christopher Lewis
·2 min read

Gold markets have broken down a bit during the trading session on Thursday, slicing down below a couple of hammers. At this point, gold looks like it is about to fall apart, but it is not until we break down below the $1750 level that I feel gold really start to kick off a major move lower. The $1500 level underneath could be the target given enough time, and obviously we will not get there overnight. Gold is extremely sensitive to interest rates, mainly for the ability to simple collect coupons instead of paying for storing gold.

Gold Price Predictions Video 26.02.21

While some metals will do quite well, namely silver and platinum, gold is going to get hammered in the reflation trade if interest rates continue to climb. Because of this, there has been a bit of a market to be made for shorting gold while buying silver and profiting from the differential. This spread trade has been quite profitable, and one that a lot of people are getting involved in. Silver is sent to break out, while gold is set to break down. This does not mean the gold has to break down, just that it is more likely than not going to continue to see downward pressure, but if we do get that breakdown, it could be a rather sudden and violent drop.

All things been equal, I do think that gold eventually takes off to the upside, but we have a lot of concern to work through between now and then and of course the 10 year yields continue to be a major contributor to what happens next. If we do start to get hyperinflation down the road though, gold will be the first place people run towards.

For a look at all of today’s economic events, check out our economic calendar.

This article was originally posted on FX Empire

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