Gold markets have initially tried to rally during the month, but then started to sell off again as traders continue to worry about the overall attitude of the Federal Reserve. After all, the Federal Reserve has been very hawkish, and it does make a certain amount of sense that bond markets reflect this. When there’s a higher interest rate to be had holding paper, large funds shone gold due to the fact that it is expensive to store large amounts of metal.
At this point, the market continues to see a lot of negativity, and we have broken below the $1680 level for the first time in a few years. That area has continued to be like a magnet for price, and now it looks like we are ready to go lower. The $1620 level has offered enough support to create a little bit of a “double bottom”, but I think it’s probably only a matter of time before we break down through there. In fact, in the November Federal Reserve meeting will almost certainly have a 75 basis point rate hike attached to it, but the real fireworks again and begin during the statement and the question and answer portion.
After all, a lot of traders are trying to speculate that the Federal Reserve is going to loosen monetary policy, or perhaps better put, at least step away from being so aggressive in tightening. At this point, one of the biggest arguments that they are making is that the Bank of Canada and the Reserve Bank of Australia did not raise rates as aggressively as thought. However, the ECB did, so that shows you just how bifurcated the entire global economy is.
It is more likely than not we will see Jerome Powell become very aggressive in his speech, because the stock markets have decided to ignore him again. Every time they do, he comes out and steps on the neck of speculation.
- I would anticipate more of the same, and that might be what kicks off the breakdown below the micro double bottom that we form.
- If we do break down below there, $1500 could be a real target over the next couple of months.
- I believe that November will be relatively negative, or at the very least, somewhat choppy and sideways.
- It would take a complete change in heart by the Federal Reserve to turn gold around.
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