No Inflation, we haven't been listening to the US FED
2021 economic data around the world has so far shown dismal economic performance. Just this week, we learnt that UK GDP dropped by 9% in 2020 and the US and European CPI data isn't showing what many people were expecting - Inflation.
No Inflation in sight
The US FED has repeated month after month that there's no inflation and that their expectations for the same weren't changing. The FED has reiterated that they will continue buying treasuries until full unemployment is achieved, basically, into the foreseeable future.
So, what does this mean for GOLD and other inflation-linked Commodities?
Well, for starters, most Commodities hit new yearly highs this week while other broke all time highs. However, Gold didn't. Gold has been sliding for months and I have been trying to make sense of the move. I'll give it my best shot to explain it
Cotton
Platinum
Correlations
This week, Tavi Costa shared a really important chart comparing real yields and gold prices. The interpretation was that GOLD is going to follow the real yields higher. This is because nobody's making money in the 1 to 5-year treasuries as yields are sliding in the negative area. This will force investors to move their holdings to Gold hence it'll skyrocket.
The other scenario
Since inflation expectations have been tapering with new economic data coming in worse than the previous, the US Dollar may go higher. Steven Van Metre, a guy I adore when it comes to analyzing market data, seems to think that the US DOLLAR has already hit the bottom.
I personally feel that a stronger DXY is going to destroy the financial markets including government debt.
The GOLD 50-day and 200-day Moving Averages have already been crossed exposing lower targets of $1764, $1700 and $1600.
This changes everything.
From the CFTC COT Weekly Data, Net positions for Money Managers have been falling for a long time and it seems that the hedge funds aren't done winding up their long positions.
No Inflation in sight
The US FED has repeated month after month that there's no inflation and that their expectations for the same weren't changing. The FED has reiterated that they will continue buying treasuries until full unemployment is achieved, basically, into the foreseeable future.
So, what does this mean for GOLD and other inflation-linked Commodities?
Well, for starters, most Commodities hit new yearly highs this week while other broke all time highs. However, Gold didn't. Gold has been sliding for months and I have been trying to make sense of the move. I'll give it my best shot to explain it
Cotton
Correlations
This week, Tavi Costa shared a really important chart comparing real yields and gold prices. The interpretation was that GOLD is going to follow the real yields higher. This is because nobody's making money in the 1 to 5-year treasuries as yields are sliding in the negative area. This will force investors to move their holdings to Gold hence it'll skyrocket.
The other scenario
Since inflation expectations have been tapering with new economic data coming in worse than the previous, the US Dollar may go higher. Steven Van Metre, a guy I adore when it comes to analyzing market data, seems to think that the US DOLLAR has already hit the bottom.
I personally feel that a stronger DXY is going to destroy the financial markets including government debt.
The GOLD 50-day and 200-day Moving Averages have already been crossed exposing lower targets of $1764, $1700 and $1600.
From the CFTC COT Weekly Data, Net positions for Money Managers have been falling for a long time and it seems that the hedge funds aren't done winding up their long positions.
