Hey Traders, Today the Fed will make the decision weather or not to raise the federal funds rate. Many people believe that higher interest rates are bad for Gold however higher interest rates in THIS economic environment are NOT bad for Gold. This cycle of rate hikes have been extremely bullish for the metals. In Fact, it was the rate hike in December of 2015 that caused gold to bottom and then rally for the first half of the year. The Fed began to promise more rate hikes in 2016 however we did not get one until December.. Investors were believing that the fed was actually going to raise rates throughout 2016 while a select few (including myself) were saying no wayyy. As Investors Started to figure out that the Fed was blowing smoke up there you know what, they began to lose faith in the rate hikes around September of 2016. Gold sold off dramatically, almost wiping out the entire rally that occurred in the beginning of 2016 (78% Decline). Gold sold off dramatically but what made it stop? Look on the chart below and you will see all of the recent rate hikes by the fed and when they took place. The Metals bottomed in December of 2016 again (Just like 2015) and began to take off higher due to a rate hike! Again in March, the metal bottomed and took off higher! I am expecting a quarter of a point rate hike today and I believe this will be very bullish for the metals! This may be the surge that pushes price through $1,300-$1,310. If price breaks through that zone, $1,350 would be the next stop for gold! Please check out my recent idea called "Why Gold Will Most Likely Continue Higher" to see the trade setup shown above. I have linked that idea below. Please comment below with any analysis or questions, thanks traders & good luck trading today!
Trade wurde manuell geschlossen
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This trade has been closed with a small loss and flipped to a short position. Please check out my recent idea "Gold Reversal Confirmed! New Short Trade" to see my reasons for entry along with my entry price, targets, & stop loss. Gold looks like it is attempting to revisit its daily lows outlined in my recent idea. Gold may be due for a small bounce here to retest the 1250 level or even the upper trend line on the chart above as resistance before moving lower. There may be another opportunity for short entries at a better price.
Kommentare
gaptraderhq
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@Alec40 ... Alec are we still looking Long on this trade? Nice clean, easy to read charting as well. Cheers
Alec40
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@gaptraderhq, Thank you for the kind words! I am personally still long until my stop gets hit, however if gold creates another Lower high, that would indicate to me that price has reversed and will head lower! I will update this idea with a new chart as soon as possible. We need the metals to start heading higher here or we can assume that price will continue to fall. As of right now price is still technically uptrending so watch out for that lower high on the 4hr chart. Also watch $1,240-$1,250 price level, Gold needs a strong bounce off of this level in order to head higher. I hope this was helpful & be sure to check back as I will be posting a chart ASAP.
Alec40
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@gaptraderhq, As of right now Gold is still technically in an uptrend however, one more lower high would confirm a trend reversal on the 4 hour chart & most likely trigger some more selling. If you are trading the daily chart, then I would pay more attention to the "Crucial low" Labeled on the chart below. A break & close below this low would signal a possible daily trend reversal. I hope this was helpful!
gaptraderhq
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@Alec40, cheers buddy... i appreciated the reply. Thankyou very much. Love your charting, clean, details... very easy to read & with call!!!
agile
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Thanks for sharing.. can you explain why the rate hikes influence the gold price? What's the "difference" with our current economy you refer to?
Alec40
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@agile, Thank you for viewing! There are many reasons that could be debated but the easiest one to point out would be the debt. The US is already operating from deficit, higher interest rates would increase the Budget deficit. If debt is unsustainable already and unable to be paid back (which is proven by a decade of near 0 interest rates and deficits) then I would assume higher interest on all that debt would make it that much more unsustainable. Not to mention if the Fed continues to raise rates, the markets will be affected, housing prices will fall, the value of bonds will decrease etc.. This is a bullish scenario for Gold. Also the recent economic data has been horrible and we can see that higher interest rates in a world of debt and leverage are already beginning to impact the economy. I personally believe the Fed is beginning to raise rates in order to be able to cut them during the next financial crisis.
agile
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@Alec40, thanks for answering. Your explanation makes total sense.