In looking at the XAUUSD using multi-time frames (mostly weekly and daily) this longer-term trade is built on the basis of greater uncertainty in the near future. As the VIX bottoms out and begins its ascent, traders are bracing for increasing volatility in the months up until the US elections. This, coupled with seasonality factors attributed to rising XAUUSD during October, gives more credence to this trade (not a fact, rather a myth). Historically, it has been viewed that keeping a small portion of around 5% of your net worth in XAUUSD would be an ideal portfolio allocation. But today more mention of higher XAU allocations, among high-profile investors, of upto 25% of their net worth due to their dwindling outlooks and forecasts in the coming period. The potential of obtaining 30%+ returns on this trade makes one dismiss the damage likely to be done to other holdings whether in equities or bonds, among others. Always remember there no absolute safe position, only proper allocations.
Trade active:
XAUUSD is one of a very few assets I am still willing to buy on dips. At the moment, this decline isn't signaling a reversal. I see this opportunity will last until a low of US$1800, wherein I would continue holding but may reconsider further dip buying as it may be the beginning of a reversal sign.