At the moment, gold is a tough commodity to pin down.
Its correlation to real rates was the talk of the market last year but that relationship has disappeared. Inflation has surged but it left gold behind.
Now central banks are hiking rates at an accelerating pace, something that should be hurting gold. There's also fear about Russia selling some of its enormous reserves in the event of a Ukraine invasion and sanctions. Yet gold has held its own this year, trading at $1822 from $1828 on December 31.
When you zoom out, the weekly chart shows a year-long period of consolidation but also a minor series of higher lows. It's all teed up for a break (higher or lower) that could be one of the best trades of 2022.
What's so tough about gold is that it confounds to fit within a narrative. I think there's a growing likelihood that resolves bearishly. Crypto is back on its feet in the past week and that continues to erode the allure of gold. The seasonal tailwind in gold also fades from March onwards.
