It's time to long the gold
You must be aware of the recent significant rise in the long-dated US treasury yields. If this continues, the US Federal Reserve will find it very difficult to dismiss the combined risk of inflation and volatility. The excessive risk-taking by the governments and the banks, backed by the massive liquidity injection is supporting the markets. But that cannot be done for an indefinite period. Somewhere this massive amount of 'Quantitative Easing' or in simple words 'Rampant Money Prinitng' will end up with an inflationary disaster. High prices and vanishingly slim yields on Treasury bonds have provided support for equities since last year. The recent stung by expectations for rising inflation has made the yields go high. This must make us ponder upon the potential tipping point for equities.
This makes gold even more attractive as a hedge against inflation and as a safe instrument. Past periods of high inflation have weighed heavily on real returns from the equities and debt market. Both are still the most favoured investment option as inflation and interest rates are low. But the torrent of liquidity injected by central banks have once again raised the inflation forecasts. Thus we need to position ourselves accordingly.
Technically too, gold has given a breakout and is sustaining above the highs marked in 2011-2012. In the lower time frame charts, it has found good support near 1760. One can initiate a long trade here from both long term and short term perspective.
This makes gold even more attractive as a hedge against inflation and as a safe instrument. Past periods of high inflation have weighed heavily on real returns from the equities and debt market. Both are still the most favoured investment option as inflation and interest rates are low. But the torrent of liquidity injected by central banks have once again raised the inflation forecasts. Thus we need to position ourselves accordingly.
Technically too, gold has given a breakout and is sustaining above the highs marked in 2011-2012. In the lower time frame charts, it has found good support near 1760. One can initiate a long trade here from both long term and short term perspective.
Disclaimer
The information and publications are not meant to be, and do not constitute, financial, investment, trading, or other types of advice or recommendations supplied or endorsed by TradingView. Read more in the Terms of Use.