Pennant - Thoughts on road ahead for gold?

2019年7月12日

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:

• 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!

2019年7月12日

注释

EDIT: Waiting for entry until breakout of pennant.