Pennant - Thoughts on road ahead for gold?
Updated
Possible long trade to 1478-1523 area.
We seem to currently be at the pivotal moment for gold.
Either a breakdown or continuation will happen, depending on market sentiment, inflation and the Fed's decisions.
My thoughts:
I think expectations about the Fed's decision are more important for gold than inflation itself, meaning if inflation picks up the lowered expectations for a cut would outweigh the inflation hedge argument, sending gold lower.
Since the Fed is hinting at a rate cut, I favor the bullish argument in the shorter term.
In the longer term, stronger economic growth and a rising stock market following the cut could encourage risk-on sentiment, sending gold lower again.
What do you guys think?
I would love to hear your thoughts on gold going forward, so please leave a comment and contribute to the discussion!
We seem to currently be at the pivotal moment for gold.
Either a breakdown or continuation will happen, depending on market sentiment, inflation and the Fed's decisions.
My thoughts:
- If inflation picks up, gold is a popular hedge against it. This could mean gold prices move up.
- However, higher inflation lowers expectations of a rate cut. If there is no rate cut, gold is less attractive.
- Gold performs well if there is fears of a recession and a stock market crash. Fed chair Powell is hinting that a preventative rate cut could be on the table in July, lowering fears of a recession.
I think expectations about the Fed's decision are more important for gold than inflation itself, meaning if inflation picks up the lowered expectations for a cut would outweigh the inflation hedge argument, sending gold lower.
Since the Fed is hinting at a rate cut, I favor the bullish argument in the shorter term.
In the longer term, stronger economic growth and a rising stock market following the cut could encourage risk-on sentiment, sending gold lower again.
What do you guys think?
I would love to hear your thoughts on gold going forward, so please leave a comment and contribute to the discussion!
Note
EDIT: Waiting for entry until breakout of pennant.
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.