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Weak gold and silver prices on the back a rising dollar and higher yields.
Precious metals traded weaker this week as the global macro-economic outlook has improved. The USD found a renewed strength and bond yield were up, which were the main drivers for the pressure on the precious metals. We also note that US stock market rally shows signs of running out of steam while at the same there is no improvement in precious metals. We think that the risk-on / risk-off deal is no longer playing out in historic terms.
Recent comments from the FED affirms that they will continue to hiking rates until inflation gets under control and starts declining. That too is in a kind of contradiction with market expectations; it assumed the FED were to change its projected course of action in the pace of recent week economic data.
As for now, the dominant impact is the central bank driven macro-economic outlook and micro assumptions, most often based on historic sets of data points, favors a scenario of “back-to-the-future” with new normal economic conditions. It is important here to understand the definition of the “new normal”; it is likely to be a prolonged period of uncertainty with regards to the short- and medium-term outlook but not impacting in a major way precious metal prices.
Knowledge is power.