simonsays452
Long

Gold at interesting crossroad

FX_IDC:XAUUSD   Gold / U.S. Dollar
27 0 3
Gold's been on a tear - no news there. Prior to last month's Jobs Report, the "macroscape" was one awash in fear of a global recession and deflation - including the US. Markets were taunting the BOJ, equities were tanking, oil             couldn't find support and the dollar was being sold. All the while, gold             continued its march higher. Why?

The headline February Jobs Report handily missed expectations, but the important data showed a lurch higher in wage inflation . CPI             has continued to run hot and with oil             up +30% since then, I believe the market is underpricing the risk of rate hikes. So is this rally in gold             due to anomalous US inflation fears? If so, we'd expect to see those fears priced into dollar, Fed Funds, TIPS, and Treasury markets. All of which appear to reflect expectations for global deflation.

That said, tomorrow we'll get another chance to test that hypothesis. I expect wage inflation to continue to run hot. I'll be looking to get long gold             around 1240 with a target of 1300 via April             1300 calls.
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