At the same time, the inflation threat continues to grow, which means real rates will remain in low to negative territory.
Before we get into the specifics of gold and silver, let’s look at overall market conditions.
Gold investors need to watch oil prices because it is one of the most significant factors that drive inflation pressure, which is currently at its highest level in 40 years.
While the inflation threat is nothing new, according to many analysts, investors are finally taking it seriously.
This is causing investors to flee equity markets and shun a lot of the risk they embraced in the last two years, which is why the risky tech sector and Nasdaq are leading the downtrend.
These conditions will only worsen as inflation pressures have not yet peaked and the Fed has to step in to deal with the looming threat.
Finally, to cap off monetary policy, there are expectations that the Federal Reserve will start to reduce its balance sheet before the end of the year.
“The odds are very low that they’re going to pull that off without some sort of market correction,” said Peter Grosskopf, CEO of Sprott Inc., in a recent interview with Kitco News.