The Federal Reserve’s impending interest rate hike, which has driven the U.S. dollar to a nearly 20-year high, is prompting gold investors to reduce their bullish positioning, according to the latest trade data from the Commodity Futures Trading Commission.
Analysts have noted that the Federal Reserve’s plan to tighten its monetary policy aggressively to address the growing inflation threat is a significant headwind for gold.
Silver is also hurting as hedge funds respond to the Federal Reserve’s expected rate rise.
Base metals are being weighed down by the mounting possibility of a worldwide economic recession. Silver is not only suffering as a monetary metal, but it is also seeing a drop in industrial demand. According to research released last week, hedge funds have significantly reduced their exposure to copper. According to analysts, China’s economy is faltering due to COVID-19 restrictions.
Given the long-term nature of high food and energy costs and the fact that inflation is deeply embedded in the economy, the U.S. central bank is likely to maintain its hawkish policy signals. This means that any price rallies, such as the one over the previous few days, may be short-lived, and long liquidations may remain the norm well into the second half of the year,” according to T.D. Securities analysts.
*Red lines are downtrend. The heavy red line is the long-term trendline.
*Green lines are uptrend. The heavy green line is a long-term trendline.
*Blue lines are short term support & resistance lines
(Picture 1. Trendlines & Support/Resistance)
You can check more interactive graphs from our Tradingview account.
(Picture 2. – Garterly pattern, moving averages, and RSI)
In conclusion, there are “mixed feelings” in the market, and one must keep an eye on price action and near-coming support areas to make educated price speculation.
Disclaimer: This article is for informational purposes only and is not intended as an investment analysis or recommendation to sell or buy commodities. Tavex is not responsible for any decisions made based on this information. Investing is associated with opportunities and risks, and the market value of commodities can both increase and decrease. Past or future yields on the commodities and financial ratios shown above do not represent a promise or an indication of future earnings.