As interest rates show signs of peaking, gold prices are nearing new all-time highs.
The gold market hit the $2,000 level this week and showed resilience following the Federal Reserve’s quarter-point rate hike announcement.
Bulls are expecting gold’s momentum to carry forward to new record highs above $2,100 an ounce. Last spring, gold’s rally failed just below that level. And short sellers in the futures market are eyeing an opportunity to knock gold prices back down at resistance levels.
It may take multiple attempts, but if gold can break out of its three-year trading range decisively to the upside, the market will enter uncharted territory. With no overhead resistance left to defend, bears may be forced to capitulate. A short squeeze could potentially catapult prices much, much higher.
Turning to the silver market, it has been underperforming gold in recent weeks but silver has risen over 50 cents this week to $23.50 per ounce.
Metals investors continue to await the end of the Federal Reserve’s rate hiking campaign. This week Fed chairman Jerome Powell signaled there would likely be one more hike to come.
But looking out a year ahead, the bond market is pricing in a significant likelihood of rate cuts. Longer-term interest rates peaked five months ago.