(Kitco News) The precious metals and crypto markets are experiencing a “stealthy rise,” says Pepperstone. But does that mean investors are stepping up their protections?
“There’s been a stealth creep in crypto and precious metals lately, but they’ve stepped on the radar and commanded more airtime on social media/trading platforms,” said Chris Weston, Pepperstone’s research director.
Markets are concerned about the US inflation data due tomorrow and what it will mean for the March Federal Reserve meeting.
“I will not say that both markets were bought as an inflation hedge as there is simply a low correlation between crypto/gold and expected inflation – I certainly see gold as a better portfolio hedge against a central bank changing stance and as a potential one walk behind rate hike expectations,” Weston said. “I think if interest rates are this high across the developed market spectrum and yield curves are flattening (some see this as increasing the likelihood of a future recession), then maybe it makes sense to stay within a broad range Portfolios to buy insurance against revaluation. In any case, gold and silver are finding buyers despite higher US real rates and a slightly stronger USD.”
According to the CME Fed Watch Tool, market participants are already pricing in a 26.9% probability of a 50 basis point rate hike in March.
And if inflation turns out to be higher than expected, those expectations will gain popularity. Currently, market consensus calls are forecasting annual US inflation to accelerate to 7.3% in January.
Gold is looking to test resistance at $1,847 and silver is finding support at $22.40, Weston said.
“Silver (XAGUSD) has found so much buying support between $22.40/00 lately with the price subsequently consolidating before the buyers are now stepping up their game – we broke the 38.2% Fibo of the late January drop , and $23.60 should now be his short-term target,” Weston pointed out.
At the time of writing, Comex April gold futures were $1,835.10, up 0.39% on the day, and March silver was $23.31, up 0.50 % during the day.
Bitcoin’s trading pattern looks solid as it attempts to rally above $44,000, Weston added.
“I don’t mind the shape of ETH but bitcoin is looking interesting here as the price breaks through 44k and the supply zone can be seen throughout January – looking strong after rallied for five straight days and was the best run since September,” he said. “Bitcoin is a momentum vehicle for me – I only go long when it rises and short when it falls – simple, but if crypto is a pure flow instrument that rides along and aligns with the collective thought of the market, that’s good for me.”
At the time of writing, Bitcoin was trading at $44,351.62, up 2.8% on the day, and Ethereum was trading at $3,228.11, up 5.3% on the day.
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