Are we facing a temporary correction or a radical shift?
Today’s session was anything but ordinary for precious metals markets, as gold and silver together lost about $1.05 trillion in combined market value in a single day, recording a sharp drop that pushed gold below important levels and saw silver fall significantly.
This violent plunge did not come out of nowhere, but rather as a result of the accumulation of several pressure factors affecting the markets at the same time:
• First, the U.S. Federal Reserve’s monetary policy and the latest hawkish statements that keep interest rates high, along with a notably increased likelihood of a rate hike at the October meeting according to the latest data.
• Second, U.S. Treasury bond yields that have reached elevated levels not seen in years, exerting a structural pressure on non-yielding assets like gold.
• Third, geopolitical pressures and statements about reopening the Strait of Hormuz, which kept oil within certain levels but heightened inflation fears and contributed to the strength of the U.S. Dollar Index.
Despite the severity of this violent retreat, long-term structural support is still in place—especially with global central banks continuing their intense buying, led by China. This suggests that we are likely seeing a sharp correction wave within a structurally upward trend across longer time horizons, and not a complete reversal of the overall trend.
$PAXG
Today’s session was anything but ordinary for precious metals markets, as gold and silver together lost about $1.05 trillion in combined market value in a single day, recording a sharp drop that pushed gold below important levels and saw silver fall significantly.
This violent plunge did not come out of nowhere, but rather as a result of the accumulation of several pressure factors affecting the markets at the same time:
• First, the U.S. Federal Reserve’s monetary policy and the latest hawkish statements that keep interest rates high, along with a notably increased likelihood of a rate hike at the October meeting according to the latest data.
• Second, U.S. Treasury bond yields that have reached elevated levels not seen in years, exerting a structural pressure on non-yielding assets like gold.
• Third, geopolitical pressures and statements about reopening the Strait of Hormuz, which kept oil within certain levels but heightened inflation fears and contributed to the strength of the U.S. Dollar Index.
Despite the severity of this violent retreat, long-term structural support is still in place—especially with global central banks continuing their intense buying, led by China. This suggests that we are likely seeing a sharp correction wave within a structurally upward trend across longer time horizons, and not a complete reversal of the overall trend.
$PAXG
