Gold and Silver are Under Selling Pressure Again
This Monday gold has dropped to 100 USD per ounce and silver cratered 10% before recovering but was still down 3%. During this period around 4 billion USD worth of gold futures were sold.
Since gold and silver crash regularly it is not something new to see here. However, the fact that gold has dropped below its long-term uptrend line only shows that things are only getting worse.
The situation with inflation stays stable, as it is not going anywhere and is kept quite high with no ease. There are still some chances that the Federal reserve (Fed) will start reducing its Quantitative Easing (QE) program by the end of the year which will result in a bearish trend for precious metals. As the EURUSD pair is trying to drop below July’s highs it looks like the USD might be starting another leg higher.
Those who bought gold in April 2020 are now up circa 5% and it’s not even higher that the official Consumer Price Index (CPI) inflation. That’s why they say gold is one of the worst inflations hedges ever. However, if we look at the SP500 index, it was up 70%, and West Texas Intermediate (WTI) oil is up 200%, when some of the crypto currencies were up 1000%.
The times when traders were buying gold against inflation are left in the past and it means there is no reasons to buy the bullion except a good technical situation or just a global preference of gold over other assets. No one wants to buy and hold an assets that is so much affected by inflation and only drops in its price when you can buy stocks which tend to go uptrend.