(Kitco News) The precious metals and crypto markets are seeing a “stealth climb,” says Pepperstone. But does that mean investors are stepping up their protection plays?
“There’s been a stealth creep in crypto and precious metals of late, but they have kicked onto the radar and commanded more airtime in social media/trading floors,” said Pepperstone head of research Chris Weston.
Markets are worried about the U.S. inflation data, scheduled for release tomorrow, and what it will mean for the Federal Reserve come March meeting.
“I will refrain from saying either market have been bought as an inflation hedge as there is simply little correlation between crypto/gold and expected inflation – I certainly see gold as a better portfolio hedge against a central bank pivoting in their stance and a potential walk back of rate hike expectations,” Weston said. “I guess when rates pricing is so rich across the whole developed market spectrum and yield curves are flattening out (some see this as a rising chance of a future recession), perhaps buying some insurance, within a broad portfolio, against repricing makes sense. Either way, gold and silver are finding buyers despite higher U.S. real rates and a modestly stronger USD.”
According to the CME Fed Watch Tool, market participants are already pricing in a 26.9% chance of a 50 basis point rate hike come March.
And if inflation comes in hotter-than-expected, those expectations will gain more popularity. Currently, market consensus calls are projecting annual inflation in the U.S. to accelerate to 7.3% in January.
Gold is looking to test its resistance at $1,847 and silver is finding support at $22.40, said Weston.
“Silver (XAGUSD) has found so much buying support of late between $22.40/00, with price subsequently consolidating before the buyers have now stepped up their game – we pushed through the 38.2% fibo of the late January decline and $23.60 should now be the near-term target,” Weston pointed out. “Gold wants to have another sniff at downtrend resistance at $1,847, a level that seems so important for the gold market.”
At the time of writing, April Comex gold futures were at $1,835.10, up 0.39% on the day and March silver was at $23.31, up 0.50% on the day.
Bitcoin’s trading pattern looks solid as it attempts to rally above the $44,000 mark, Weston added.
“I don’t mind the shape of ETH, but Bitcoin looks interesting here, with price breaking the 44k mark and the supply zone seen throughout January – this looks strong, having rallied for five straight days and the best run since September,” he said. “Bitcoin is a momentum vehicle for me – I only take longs when it’s rallying and short when it’s falling – simple but when crypto is a pure flow type instrument hitching a ride and aligning with the collective thoughts of the market serves me well.”
At the time of writing, Bitcoin was trading at $44,351.62, up 2.8% on the day and Ethereum was at $3,228.11, up 5.3% on the day.
Disclaimer: The views expressed in this article are those of the author and may not reflect those of Kitco Metals Inc. The author has made every effort to ensure accuracy of information provided; however, neither Kitco Metals Inc. nor the author can guarantee such accuracy. This article is strictly for informational purposes only. It is not a solicitation to make any exchange in commodities, securities or other financial instruments. Kitco Metals Inc. and the author of this article do not accept culpability for losses and/ or damages arising from the use of this publication.
Be the first to comment