It’s FOMC week, the eggheads have dispersed to their private offices and now into the void comes man, machine, black box and casino patron of all stripes. FOMC week; it was bound to be volatile.
Let’s take a gold-centric view to gauge the metal’s standing within the wider markets.
Gold/Silver is bouncing this morning along with the US dollar. That’s normal, both in the correlation between the GSR and USD and in their bounce status amid a post-FOMC disinflationary whiff. Remember here that silver leads the party, gold leads on negative liquidity phases. The trend is hard down and today’s bounce is not only normal, it was probably imminent.
This could be the spark that would see markets fill those lower gaps (as noted in the last couple NFTRH editions) below the SMA 50 (SPX). But this chart certainly cannot in and of itself mark an end to the Q4-Q1 party seasonal phase.
Gold/ES is intact and just fine. In my opinion just waiting for mass perception of the relative value of gold over the US stock market. Gold is less impressive vs. global stocks as a whole because the weak USD has been aiding global over US stocks (ref. NFTRH 735 Global Markets segment).
Gold/Copper is still indicative of a Q4-Q1 relief phase that is intact. In fact, curiously the ratio is negative today. Bigger picture, I expect this long consolidation to resolve upward in 2023. It’s an expectation based on our ongoing narrative. Does not mean it can’t change but I’m not going to change it until given reason. As yet, I don’t see a reason. If/when this ratio breaks upward again it would likely be in unison with global market liquidity problems and counter-cyclical economic signaling.
Finally, gold is making progress vs. a rough gauge of inflation expectations (RINF). Aside from the short-term outcomes of bear market rallies and declines, this chart would paint gold as gaining value perception vs. the inflation trades. It would also signal improving gold mining fundamentals (as would the Gold/Silver ratio when it stops dropping one day) and a liquidity constrained macro. Problem being, these indications would come about with negative market liquidity and economic signals, likely in H1, 2023.