Gold Price plunges below $1,900

Gold changed course after hitting a multi-month high of $1,974.40 a troy ounce and plummeted to $1,877.96, now bouncing modestly from the latter up to $1,889.80.

Gold began shedding ground heading into the US opening, accelerating its slide afterwards. A recovery in Wall Street put the final nail on gold’s coffin and pushed it below the 1,900 level.

Stocks cheered comments from US President Joe Biden, who announced several aggressive international sanctions on Russian people and institutions.

Gold trades near a fresh weekly low and the near-term picture hints at another leg south, mainly on a break below the aforementioned daily low.

gold’s bull run was in response to heightened inflation expectations, not to the threat of armed conflict in Eastern Europe.

The interest for gold has reflected the fundamentals, and the fundamentals are the markets understanding that rates would not move much higher. The market is already telling that traders believe in more growth, that they did not believe in higher rates, and that we are facing peak growth and peak inflation.

Russia’s recent actions against Ukraine will no doubt weigh on global growth, which would force the central banks around the world to think three times about raising interest rates.

This war cannot create more growth. The market has been telling for several months that there is a deceleration phase and this means that rates cannot go much higher. This is what the bond market is telling us and the equity market has gone sideways for several months.

Because real interest rates are likely to stay in negative territory this year, macroeconomic forces are still positive for the precious metal.