Has gold started a reverse march? Maybe yes

In the last week the prices ofphysical gold, after reaching a maximum, they began a slow reverse. The case, for having occurred in a week, was quite significant:

What’s going on? What can move the price of gold now and where is it heading now? Let’s analyze some relevant factors:

1. First we need to know why the price of gold collapsed. Yesterday’s drop was due to “reduced concern about conflicts in the Middle East”, and gold prices simply wiped out all the gains since April 12th. April 12th is a special day. It is the day the market is most worried about the conflict between Iran and Israel. That day, the price of gold reached a record high. What happened yesterday is that a positive factor for the price of gold disappeared (but the risk of a new war in the Middle East is not excluded).

2. A $60 drop in one day was notable, but it’s also in conjunction with investor sentiment. The problem is that the price of gold had risen too rapidly, so many operators expected prices, at this point, to first stabilize and then fall. Some technical factors also recommended the reset

3. Gold has become detached from its fundamental factors, and if these factors come back into focus, it could be detrimental to gold. Now the price makes no sense for industrial use. Physical gold is a pure investment, like Bitcoin, and bitcoin, having reached its maximum, also fell.

4. The biggest suspense is whether the market’s “change in expectations of the Federal Reserve interest rate cut” will affect gold. The price of gold has hit new highs over the past three weeks, coinciding with a period in which market expectations for an interest rate cut by the Federal Reserve have cooled significantly. These expectations have cooled.

5. From a temporal perspective, gold is in a period of historic seasonal weakness. The last time gold fell into a historic bear market was in mid-April 2013. However, unlike in the past, when Wall Street issued mostly bearish reports, major Wall Street banks are now bullish.

As for the onset of a “great recession” it will become clear on Friday, when the US releases the core PCE price index for March, which is the Fed’s preferred inflation indicator. At that time, we will see how sensitive it will be the market to changes in expectations of interest rate cuts by the Fed.

Gold will continue to decline: all this will depend on two factors:

• contrast between inflationary pressure, which drives the purchase of gold as a safe asset, and expectations of a reduction in rates, not only in the USA, but at a global level;
• what is happening in China, at the level of interest rates, but also of family investment, whether this will return to the real economy or go towards hoarding in the grains of gold that many families are buying now.