Three reasons behind this week's 5.5% gold rally

[View this email in your browser]( [Youtube]( [Kitco Metals]( Editor's Picks [@neils_C]( It has been an incredible week for the precious metals markets as [gold]( sees its best weekly performance in nearly two years. [December gold futures]( are ending the week around $1,770 an ounce, up 5.5% from last Friday. At the same time, prices are up more than 9%, bouncing off of last week’s two-year low. According to some market analysts, three major factors are driving this new bullish momentum in the precious metals market. The first is growing recession fears as the inverted U.S. yield curve remains at its widest level in 40 years. We mentioned this in last week’s newsletter. A new factor supporting gold’s safe-haven appeal is the growing chaos in the cryptocurrency market. There are concerns this chaos could impact broader market conditions. [It has not been a good week for one of the world’s largest crypto exchanges as FTX announced Thursday night that it was filing for bankruptcy.]( a few days, the digital exchange went from a market valuation of $32 billion to basically worthless. The knock-on effect has been significant, with nearly 130 corporate entities affiliated with the exchange, including Alameda Research, filing for bankruptcy. If the 2008 financial crisis is any barometer of the growing financial crisis in the digital marketplace, this will only get worse. The catastrophe in cryptos is coming as rising interest rates are taking their toll on the broader economy. Friday, The University of Michigan said in its preliminary reading of its Consumer Sentiment Index dropped to 54.7, its lowest level since June. The Federal Reserve’s aggressive monetary policy tightening is a significant factor weighing on sentiment. However, there is some good news on that front, which is the third factor behind this week’s rally in gold. Thursday, the [U.S. Consumer Price Index rose less than expected to 7.7%; economists were looking for a 7.9% rise.]( The weaker-than-expected rise in consumer prices has prompted markets to shift their expectations on U.S. monetary policy. Markets have pretty much priced in a 50-basis point move next month. Last week expectations were 50/50 on whether or not the central bank would be more aggressive. For many economists, this has been a sign that the Federal Reserve is closer to the end of its tightening cycle, which has created some selling pressure for the U.S. dollar. While the new rally in gold is exciting, we do want to include a word of caution. Although the Fed could slow down the pace of rate hikes, the peak of 5% remains firmly in place. Ultimately rising interest rates create a headwind for gold. Although we aren’t out of the woods just yet, the path for higher gold prices has become more evident, and more investors are interested in taking it. Have a great weekend. Neils C. Editor's picks [Fed will go 'too far' and 'break' the economy, this is how to hedge - Lobo Tiggre]( will go 'too far' and 'break' the economy, this is how to hedge - Lobo Tiggre]( [Gold is cheap and wants to go higher - Dennis Gartman]( is cheap and wants to go higher - Dennis Gartman]( [The Ultimate Gold Panel with Frank Giustra & Rick Rule - @Kitco NEWS ​]( ‘monetary reset is happening’, will gold manipulation be exposed? 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