This catalyst might set off an enormous selloff in gold

The bullish momentum in gold stays unabated given the dearth of bearish catalysts. We did get a pullback ultimately of September/begin of October because the repricing within the aggressive fee cuts expectations raised actual yields and weighed available on the market.

There’s a number of folks shorting this monster at each new excessive making an attempt to catch the highest. I do not blame them as a result of positioning is certainly at report highs, however within the markets one thing costly can get much more costly if there is no significant catalyst triggering a repricing.

Within the chart above, we will see the positioning is at report highs. We’re at ranges seen solely in 2016 and 2020. Within the greater image, gold stays in a bullish pattern as actual yields will seemingly proceed to
fall amid the Fed’s easing cycle. The pullbacks will seemingly be triggered by a
repricing in fee cuts however except the Fed’s response operate modifications, the
uptrend ought to stay intact.

One key occasion which might
set off a powerful selloff in gold is the upcoming US election. In truth, a Trump
victory will seemingly elevate actual yields on greater development and fewer fee cuts
expectations. The final time Trump obtained elected, gold cratered by 16% (chart under).

In case Harris prevails, issues will seemingly stay the identical and gold will seemingly proceed to push into new highs with the pullbacks coming from the repricing in fee cuts on sturdy US information.

This text was written by Giuseppe Dellamotta at www.ubaidahsan.com.



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