Gold and silver have broken down, but the precious metals aren’t broken

[View this email in your browser]( [Youtube]( [Kitco Metals]( Editor's Picks [@neils_C]( It has not been a good week for [gold]( investors as the market has sold off significantly, dropping 4% from last Friday. Gold is actually seeing its worst week since June 2021 and while this looks bad, the precious metal still has room to go lower. Some analysts have said they wouldn’t be surprised to see prices ultimately test the February lows just above $1,800 an ounce. While the breakdown has been dramatic, it’s also not unexpected; the market has been consolidating between $1,900 and $1,980 since mid-June. Many analysts will point out that the longer the consolidation, the more violent the breakout. It’s also not surprising that gold has fallen below $1,900 when you look at the surging momentum in the bond yields and the U.S. dollar. The yield on 10-year notes pushed to a new 16-year high above 4.6% this week and the U.S. dollar index rallied above 106 points, hitting its highest level since November. These significant headwinds proved too much for gold and silver as the precious metals gave up critical near-term support. While it’s easy to be disappointed in gold’s price action, some analysts note that the selloff hasn’t changed the broader landscape. Analysts also note that even with this week’s selloff, gold continues to hold up relatively well. [Ole Hansen, head of commodity strategy at Saxo Bank, said that the negative correlations between gold and the U.S. dollar and bond yields have significantly broken down.]( In fact, he said that the only thing gold is correlated to right now is milk. However, Hansen added that gold should find some support as the Federal Reserve’s aggressive monetary policy continues to push the U.S. economy closer to a recession, even as they are unable to get inflation back to the 2% target. "Demand for gold as a hedge against a soft-landing failure is unlikely to go away as the outlook for the US economic outlook in the months ahead looks increasingly challenged. With that in mind, we maintain a patiently bullish view on gold,” Hansen said in a recent report. There is also some solid anecdotal evidence that gold remains an attractive asset to own. [While loading up on tubs of mayo, Costco shoppers can also buy bullion through the store’s website.]( “I've gotten a couple of calls that people have seen online that we've been selling one-ounce gold bars,” CFO Richard Galanti said during the retailer's fourth-quarter earnings call on Tuesday. “Yes, but when we load them on the site, they're typically gone within a few hours, and we limit two per member.” According to Costco's website, the retailer sells one-ounce bars of 24-karat gold from South Africa's Rand Refinery for $1,949.99. For $30 more, customers can opt for an ounce from PAMP Suisse. We have been saying for a while that investors just have to be patient when it comes to gold and so far, that hasn’t changed. Have a great weekend Neils C. 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