As reported by Bart Melek, Head of Commodity Strategy at TD SecuritiesGold rose around 1.3% on Wednesday and Thursday as inflation eased, but a sustained recovery is unlikely for now.
Recoveries could dry up soon
In the case of gold, rising real rates as inflation subsides and official interest rates remain at the terminal level for an extended period may once again drive away speculation. In addition, the high rate environment, a weak Chinese economy and a pending US recession will undoubtedly weaken demand for more industrial metals such as Copper and Silver for many months to come. Although industrial demand is in decline through 2023, unlocking supply chain bottlenecks caused by COVID will likely see production from mines and smelters make more metals available.
This could mean that rallies in Gold, Silver and Copper, which have largely been driven by short covering, could soon peter out as high opportunity and transportation costs preclude any further significant increases in long exposure. New long positions are needed for these markets to overcome resistance and enter bullish territory.
This recovery is vulnerable to reversals if the Fed’s policy rhetoric remains hawkish and US data surprises to the upside.
Source: Fx Street
I am Joshua Winder, a senior-level journalist and editor at World Stock Market. I specialize in covering news related to the stock market and economic trends. With more than 8 years of experience in this field, I have become an expert in financial reporting.
