It’s the last day of October.
At times like these, I always feel like cutting off everything bad from the past (including my positions) and starting over.
My rationale for holding my gold position and going long has become too subjective and bullish, with a bit too much betting involved.
This is mainly tied to my doubts about Trump’s “TACO,” my hopes for U.S.-Iran negotiations, and the link to falling oil prices.
Gold prices are currently most sensitive to these factors.
But I overlooked one key issue: high interest rates! This is the crux of the matter. Gold is unlikely to reverse course while rates remain high.
Although there is still a chance of tensions easing between the U.S. and Iran, I can’t keep holding these futures positions. Cutting losses on a futures position doesn’t mean I’m bearish; it means exiting a bad trade. (Why cut losses? Because holding on was the wrong decision, and the daily chart broke below its previous low, continuing the downtrend in the daily timeframe. Even though the price is low, I’m following the trend and stopping out.)
I’m still bullish on gold in the long run. Central banks’ gold purchases, the U.S. fiscal deficit and debt financing costs, and the global trend toward diversifying reserve assets all support gold’s strategic value in portfolios.
The next major opportunity in gold may not come from war, but from the end of the high-interest-rate cycle and a reassessment of the dollar’s credibility around the world.
Let’s see how markets price in future interest rates at the policy meetings after December.
$XAU
At times like these, I always feel like cutting off everything bad from the past (including my positions) and starting over.
My rationale for holding my gold position and going long has become too subjective and bullish, with a bit too much betting involved.
This is mainly tied to my doubts about Trump’s “TACO,” my hopes for U.S.-Iran negotiations, and the link to falling oil prices.
Gold prices are currently most sensitive to these factors.
But I overlooked one key issue: high interest rates! This is the crux of the matter. Gold is unlikely to reverse course while rates remain high.
Although there is still a chance of tensions easing between the U.S. and Iran, I can’t keep holding these futures positions. Cutting losses on a futures position doesn’t mean I’m bearish; it means exiting a bad trade. (Why cut losses? Because holding on was the wrong decision, and the daily chart broke below its previous low, continuing the downtrend in the daily timeframe. Even though the price is low, I’m following the trend and stopping out.)
I’m still bullish on gold in the long run. Central banks’ gold purchases, the U.S. fiscal deficit and debt financing costs, and the global trend toward diversifying reserve assets all support gold’s strategic value in portfolios.
The next major opportunity in gold may not come from war, but from the end of the high-interest-rate cycle and a reassessment of the dollar’s credibility around the world.
Let’s see how markets price in future interest rates at the policy meetings after December.
$XAU
