Gold and silver were higher in early U.S. trading, but the price action has the cautious feel of a market holding its breath. Silver is hovering near recent record highs, gold is pushing on, and yet both metals are pausing as the Federal Reserve’s FOMC meeting begins today. By Wednesday afternoon we get the statement, and then the main event.
Right now, markets are pricing in a high likelihood of a quarter-point rate cut. But the tension is not really about the cut, it is about the tone. The same market that wants easier policy is increasingly wary that Powell could lean hawkish, because inflation refuses to die politely. Add to that the fresh (but increasingly frequent) uncertainty created by the delay of key U.S. producer inflation data, pushed out until January, and you have a familiar sort of modern fog: traders trying to price the future while being denied clean information about the present.
This is the backdrop to a headline you have probably already seen, and will see more often if gold keeps rising: “bubble”.
The Bank for International Settlements has warned that gold may be drifting into “bubble territory”. It is a comforting accusation. It suggests that the system is fundamentally fine and that gold is the thing behaving irrationally. It turns an awkward signal into a manageable narrative. Nothing to see here, just an excitable market.
In today’s video, we take that claim seriously, and then we do the unfashionable thing: we question the assumptions underneath it.
Because gold’s move is only “mysterious” if you insist it can be explained by one variable. If you treat gold as nothing more than an inflation hedge, then yes, it looks disobedient when real yields remain firm. But if you allow that gold also prices political risk, counterparty risk, and the changing meaning of “safe” in a world where trust has become conditional, then the behaviour starts to look less like a bubble and more like a repricing.
So if you are watching gold and silver this week and wondering whether we are at the beginning of a reversal, the peak of a mania, or the early stages of something more structural, this is the analysis to watch before Powell speaks.
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