Despite the fact gold has been the rational market for a while, it can be outperformed by industrial metals and silver. When we say “rational”, we mean the gold market is quite easy for investors to analyze and make forecasts.
The yellow metal has been under pressure for the last 3 years. The market is experiencing turbulence featuring the asset traded below $1,500 and then rising above $2,050 per ounce to hit a record high.
Nevertheless, investors still have instruments to predict the gold price direction despite the increased volatility. Price changes are quite easy to explain and read. At the same time, many countries made a strong move towards industrial metals, making the yellow metal sweep up, as investors realized the upcoming risks of rising inflation.
Luckily for traders, commodity markets managed to settle down after it became clear the FED was getting serious about rate hike policies. Speculators were flashed out of the commodity sector in search of other assets to make bigger returns.
However, once the FED has slowed down the rate hike cycle, speculators returned to the gold market. Meanwhile, bullish factors emerged to keep anxiety trading quite high. The good news is that it will not last for long as the FED returned to become the dominating driver of the yellow metal prices.
In light of this outlook, experts expect silver and industrial metals to outperform gold taking into account the materials-intensive infrastructural program approved by Joe Biden. The program is worth $570 billion and will be deployed in the next 3-5 years.
May the trading luck be with you!