After successfully predicting the unprecedented inflation global economies are experiencing today, I believe that inflation may have peaked, at least in the short run. However, I don't think it reached its last cycle peak. As central banks are raising interest rates and acting very hawkish, we may see lower-than-expected CPI data for the upcoming period (beginning of 2023), with the U.S. officially in a recession by any definition. And what happens when a soft landing ends up unsuccessful? Fed will cut and the government will stimulate resulting in another inflation spike, a weaker dollar, and stronger Gold in the long run. This is concerning the long run.
However, in the short run, the Fed and other central banks are still insisting on raising interest rates no matter the consequences as their current main objective is to fight inflation, especially central banks such as the ECB with a hierarchical mandate consisting only of price stability. But will economies endure the pain of higher interest rates in the long run? Will central banks keep on fighting inflation on the behalf of the economy's health?
From a technical perspective, Gold broke the weekly falling wedge formation and is currently trading around $1,834, thus the gravity is to the upside, if and only if the weekly falling wedge pattern remains valid.
Zooming in to the daily timeframe, we can spot that Gold may have finished 5 intermediate waves up (inside big wave C) and is currently trading near the previous wave (iv) in yellow ($1,835 zone) inside a rising wedge formation, signaling the start of an intermediate corrective cycle to retest the beginning of the wedge at around $1,720.
After retesting $1,720, if the price doesn't manage to continue its corrective behavior below $1,700, we may see a strong impulsive wave to the upside towards retesting previous highs such as $1,900 or even higher; however, falling below $,1700 or $1,680 to be more precise may signal an extended corrective behavior for a continuation towards $1,620 or even $1,580. For now, let's focus on our first intermediate corrective cycle with $1,720 as our first target before thinking of any other scenario.
Good luck!
M.Y.
However, in the short run, the Fed and other central banks are still insisting on raising interest rates no matter the consequences as their current main objective is to fight inflation, especially central banks such as the ECB with a hierarchical mandate consisting only of price stability. But will economies endure the pain of higher interest rates in the long run? Will central banks keep on fighting inflation on the behalf of the economy's health?
From a technical perspective, Gold broke the weekly falling wedge formation and is currently trading around $1,834, thus the gravity is to the upside, if and only if the weekly falling wedge pattern remains valid.
Zooming in to the daily timeframe, we can spot that Gold may have finished 5 intermediate waves up (inside big wave C) and is currently trading near the previous wave (iv) in yellow ($1,835 zone) inside a rising wedge formation, signaling the start of an intermediate corrective cycle to retest the beginning of the wedge at around $1,720.
After retesting $1,720, if the price doesn't manage to continue its corrective behavior below $1,700, we may see a strong impulsive wave to the upside towards retesting previous highs such as $1,900 or even higher; however, falling below $,1700 or $1,680 to be more precise may signal an extended corrective behavior for a continuation towards $1,620 or even $1,580. For now, let's focus on our first intermediate corrective cycle with $1,720 as our first target before thinking of any other scenario.
Good luck!
M.Y.