Virtually everybody, including your letter writer, expects the Fed to hold this week amid clear economic deceleration signals. Here is CME’s current expectation.
After this week’s FOMC meeting, the wise guys at CME Group start to grow their expectations for rate cuts. Tariff spanners in the works aside, I also think that is the favored view because I have long expected more than garden variety economic weakness. I’ve expected a full counter-cycle.
Add to these inputs the stories of Western gold buying and supply dislocations and it appears we’ve got herds running for the metal when they actually (in my opinion) should have been holding it all along as insurance, regardless of what the price was doing.
This Cup target is in at 3000+, the gold price is going vertical into FOMC. I can pretty much guarantee that a lot of people are on alert for a classic bubble blowout and reversal. Much like silver in 2011.
We are at target. Beyond that, I am like most people, watching with great interest. Is this a launch to the new macro that I have been pounding the table on since 2022 (ref. the 30yr yield Continuum)? Is it an intermediate blow out? It could be either of those things.
But as noted in yesterday’s public article, it is not a bubble. People not looking at long-term macro-fundamentals or the likes of gold’s long-term under-performance to stocks and money supply may look and see “bubble”. I do not.
As to the monthly chart above, RSI is getting quite overbought. At some point there is going to be an overbought reaction, whether it comes this week or not. But also note on the chart that the three previous occasions that it reached overbought levels of this degree, what followed were consolidations and volatility, not bull-enders.
The gold bull market is only getting started, in my opinion. Volatility is likely ahead. But I want to be clear on what we are looking at.
