The case for buying gold has been increasing over the last couple of weeks due to increased expectations that the Federal Reserve will need to stop hiking interest rates as US economic activity shows signs of slowing down.
The main economic data point concerning markets was the weak US PMI prints last week, which resulted in a strong bid coming into bonds which helped lift gold. Now this week is a really important data week for the US. On Thursday. We have the Fed’s preferred measure of inflation, the PCE reading. Then on Friday, we have the all-important labor data.
The Federal Reserve sees strong labor data as inflationary and weak labor data as deflationary, so if we see a miss in the Fed preferred measure inflation (PCE), and a miss in jobs, then it will be reasonable to expect gold to continue moving higher. This will be because bonds would be likely to find more buyers and the dollar would likely weaken and when this happens together it naturally lifts gold higher.
Also, look at the seasonal pattern that's coming out for gold. What we can see is around the turn of the month gold tends to gain so if we see a miss in these data points, the seasonal strongly supports gold upside as well. This is one pattern to keep an eye on.
Major Trade Risks: The biggest risk here is if the inflation reading comes in high and the jobs data come on strong, then that's a natural headwind for gold.
Disclaimer: Past results and past seasonal patterns are no indication of future performance, in particular, future market trends. seasonax GmbH neither recommends nor approves of any particular ...
Disclaimer: Past results and past seasonal patterns are no indication of future performance, in particular, future market trends. seasonax GmbH neither recommends nor approves of any particular financial instrument, group of securities, segment of industry, analysis interval or any particular idea, approach, strategy or attitude nor provides consulting nor brokerage nor asset management services. seasonax GmbH hereby excludes any explicit or implied trading recommendation, in particular, any promise, implication or guarantee that profits are earned and losses excluded, provided, however, that in case of doubt, these terms shall be interpreted in abroad sense. Any information provided by seasonax GmbH or on this website or any other kind of data media shall not be construed as any kind of guarantee, warranty or representation, in particular as set forth in a prospectus. Any user is solely responsible for the results or the trading strategy that is created, developed or applied. Indicators, trading strategies and functions provided by seasonax GmbH or on this website or any other kind of data media may contain logical or other errors leading to unexpected results, faulty trading signals and/or substantial losses. seasonax GmbH neither warrants nor guarantees the accuracy, completeness, quality, adequacy or content of the information provided by it or on this website or any other kind of data media. Any user is obligated to comply with any applicable capital market rules of the applicable jurisdiction. All published content and images on this website or any other kind of data media are protected by copyright. Any duplication, processing, distribution or any form of utilisation beyond the scope of copyright law shall require the prior written consent of the author or authors in question. Futures and forex trading contains substantial risk and is not for every investor. An investor could potentially lose all or more than the initial investment. Risk capital is money that can be lost without jeopardizing ones’ financial security or lifestyle. Only risk capital should be used for trading and only those with sufficient risk capital should consider trading. Past performance is not necessarily indicative of future results. Testimonials appearing on this website may not be representative of other clients or customers and is not a guarantee of future performance or success.
