On this Tuesday, the market resumed its sell-off, and the bear market downward spiral continued. Silver has had a remarkable week of performance, which is particularly impressive given the intense selling pressure that has been present across all markets. From what we can see from the chart below, the sell-off that occurred on Tuesday was a teeny-weeny red candle after a relief rally.
Meanwhile, the NASDAQ 100 lost 6% in a single trading day, erasing all of the gains made in the previous week. This time, gold did not perform as well as silver, falling to barely over the solid support.
The release of the CPI on Tuesday was the direct cause of the precipitous drop in the market. The way the market operates is really simple; whether the market is bullish or bearish depends on the course of action chosen by a tiny group of people - the Fed. The sentiment of the market is essentially a guess as to what the next action of the Fed will be. The higher the inflation, the more the rate hikes, and if there are more rate hikes, there will be greater selling pressure.
[Source: https://www.fxpro.com]
As we can see from the chart above, the predicted rate of increase of CPI is -0.1%. The actual CPI is 8.3% which is 0.2% higher than the consensus. The Consumer Price Index data was unquestionably unfavourable for all markets. The higher-than-expected CPI data indicates that the Fed will continue to exert pressure through rate hikes. It also prevents any “Fed pivot” from happening in the foreseeable future, which was something the investors were hoping for. A lot of economic pundits have been warning people over the past few months that we are not out of the woods yet. Therefore, we must keep a defensive stance with crypto or precious metals investing.
On the other hand, some analysts disagree and think the crowd overreacted because inflation is a lagging indicator. The reading on inflation that was released on Tuesday was a little bit higher than anticipated, but we are still well past the point of peak inflation. The Fed is expected to get inflation under control to the desired level by July next year. When comparing sets of data, the outcome might be affected by the base effect if the sets of data are compared using different reference points. An increase of 0.1% in inflation is like a baby; however, if you feel that this indicates inflation has not yet reached its peak level, then that’s a whole ‘nother story! As the overall inflation rate progressively decreases, silver and cryptocurrency will outperform other investments.
