Technically speaking im expecting a dip to one of the levels marked from 3.8% to 9% then a bullish continuation
Fundamentally:
Political risk and global instability are driving a flight to safety. With ongoing tensions in the Middle East, trade wars, and uncertainty in U.S. leadership, investors are seeking reliable stores of value. Gold fits the bill perfectly.
Putting all of this together, it's no surprise that gold is reaching record highs. If money supply continues to expand, central banks keep accumulating, and geopolitical tensions remain elevated, I’d expect gold to maintain its bullish trajectory.
The Fed has been maintaining rates, that adds another layer to the gold price equation. Normally, when the Fed pauses rate hikes, it signals that inflation is still a concern but that the central bank is hesitant to tighten further due to economic fragility. This type of environment is typically bullish for gold.
why:
Real Interest Rates Matter – Even if nominal rates remain steady, what really drives gold is the real interest rate (nominal rate minus inflation). If inflation stays persistent while the Fed keeps rates unchanged, real yields decline, making gold more attractive as a non-yielding asset. Investors look at gold as a hedge when their cash and bonds offer little to no real return.
Money Supply Is Still Key – If M2 is expanding again while the Fed maintains rates, it suggests that liquidity conditions are loosening. This can fuel inflationary pressures and weaken the dollar over time, both of which support higher gold prices.
The Dollar’s Role – If the Fed isn't hiking but other central banks (like the ECB or Bank of Japan) are taking a more hawkish stance, that could weaken the dollar. A softer DXY generally means stronger gold prices. However, even if the dollar remains firm, the central bank buying we've seen in recent months could still support gold.
Market Expectations – The Fed holding rates steady implies that markets will start pricing in future rate cuts, especially if economic growth slows. Once the market expects cuts, gold rallies in anticipation of easier monetary policy.
In short, a Fed pause doesn’t necessarily mean gold should fall—it depends on inflation expectations, real rates, and liquidity conditions. Given the amount of uncertainty in global markets, central bank gold purchases, and the potential for rate cuts down the line, I’d still lean bullish on gold in this environment.
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Fundamentally:
Political risk and global instability are driving a flight to safety. With ongoing tensions in the Middle East, trade wars, and uncertainty in U.S. leadership, investors are seeking reliable stores of value. Gold fits the bill perfectly.
Putting all of this together, it's no surprise that gold is reaching record highs. If money supply continues to expand, central banks keep accumulating, and geopolitical tensions remain elevated, I’d expect gold to maintain its bullish trajectory.
The Fed has been maintaining rates, that adds another layer to the gold price equation. Normally, when the Fed pauses rate hikes, it signals that inflation is still a concern but that the central bank is hesitant to tighten further due to economic fragility. This type of environment is typically bullish for gold.
why:
Real Interest Rates Matter – Even if nominal rates remain steady, what really drives gold is the real interest rate (nominal rate minus inflation). If inflation stays persistent while the Fed keeps rates unchanged, real yields decline, making gold more attractive as a non-yielding asset. Investors look at gold as a hedge when their cash and bonds offer little to no real return.
Money Supply Is Still Key – If M2 is expanding again while the Fed maintains rates, it suggests that liquidity conditions are loosening. This can fuel inflationary pressures and weaken the dollar over time, both of which support higher gold prices.
The Dollar’s Role – If the Fed isn't hiking but other central banks (like the ECB or Bank of Japan) are taking a more hawkish stance, that could weaken the dollar. A softer DXY generally means stronger gold prices. However, even if the dollar remains firm, the central bank buying we've seen in recent months could still support gold.
Market Expectations – The Fed holding rates steady implies that markets will start pricing in future rate cuts, especially if economic growth slows. Once the market expects cuts, gold rallies in anticipation of easier monetary policy.
In short, a Fed pause doesn’t necessarily mean gold should fall—it depends on inflation expectations, real rates, and liquidity conditions. Given the amount of uncertainty in global markets, central bank gold purchases, and the potential for rate cuts down the line, I’d still lean bullish on gold in this environment.
LIKE COMMENT FOLLOW
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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.