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In the latest edition of Ira Epstein’s Metals Video, dated February 22, 2023, Epstein discusses the potential impact of continued dollar strength on the price of gold. According to Epstein, the dollar’s upward trend in recent months could put pressure on the value of gold.
Epstein starts the video by highlighting the factors that have contributed to the dollar’s strength. He mentions positive economic data, such as robust job growth and increased consumer spending, as well as the Federal Reserve’s conservative stance on monetary policy. These factors, combined with a lack of major geopolitical tensions, have bolstered the dollar’s value against other major currencies.
The strong dollar, Epstein argues, could pose a challenge for gold prices. Gold, being priced in dollars, typically moves inversely with the currency. When the dollar strengthens, it becomes more expensive for investors using other currencies to buy gold, leading to a decrease in demand and potentially a decline in its price.
Epstein also touches upon the possibility of rising interest rates, which he believes could further support the dollar and weigh on gold. As the Fed aims to control inflation and stabilize the economy, it may consider increasing interest rates in the future. Higher interest rates make fixed-income investments, such as bonds and treasury bills, more attractive compared to gold, which has no yield. This shift in preference could divert investor funds away from gold, putting additional downward pressure on its price.
However, Epstein acknowledges that predicting market movements is challenging, especially when it comes to gold. He notes that there are always unforeseen events and factors that could influence the market, making it difficult to make accurate forecasts.
Despite the potential headwinds, Epstein does point out that gold has historically proven to be a safe-haven asset during times of economic uncertainty or market volatility. Should any of these factors materialize, investors may flock to gold as a way to hedge against the risk and protect their portfolios. Therefore, while the dollar’s strength may pressure gold in the short term, the longer-term outlook for the precious metal remains uncertain.
In conclusion, Ira Epstein’s Metals Video highlights the potential impact of continued dollar strength on the price of gold. While a strong dollar can exert downward pressure on gold prices, various factors such as rising interest rates and unforeseen events could influence the trajectory of the market. As always, it is advisable for investors to stay informed, consult professionals, and diversify their portfolios to mitigate risk.
Understand the fed makes policy from the data but can we stop the lie- employment and inflation have very little correlation.
It would be interesting to hear Ira's comments on the major delays in releasing the commodity COT reports. I apologize if I have already missed it.