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!
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EDIT: Waiting for entry until breakout of pennant.
thank you for sharing, i'm liking the way the community is here on tradingview, i also started sharing as i have much value to give
bjohel
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@transparent-fx, Thanks for commenting! It is a great community for sharing and discussing ideas, so we should make the most of it! I'll make sure to check out your ideas.