To The Moon

The rebound after FOMC was relatively ideal last week, and gold and silver also performed strongly, among which silver returned to above the integer level of 20. The question now is, after the worst of the monetary conditions, will there be new opportunities for precious metals and will investors be able to get on the bus (again)?

Gold and the dollar move in opposite directions

We have discussed the correlation logic between gold and US dollar before. On the premise that the dollar bull is relatively certain, gold needs to run positively with the dollar in order to have a solid foundation.

However, it is obvious that there is a very clear negative correlation between them on the hourly chart before and after the Fed's decision.

The continued binding of gold to US stocks (risky assets) means that the rebound cannot be regarded as a reversal at present.

And on the weekly chart,Gold's performance in the past two weeks is remarkable, but there is still some distance and space from the previous swing.

We expect that the market has a relatively high probability of forming a combination of sub-high and sub-low. Then the choice of a certain direction will determine the trend in the second half of the year or even next year.

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On the bright side, compared with silver, gold did not fall below last year's low in the previous round of decline. This is a relatively positive signal on the technical level. But from the perspective of right-hand trading, it may be better to let the bullets fly for a while and wait for a clear signal.

Silver's near-double-digit rebound last week helped its monthly close leave a huge shadow line. At that time, the silver price experienced more than a year of bottoming before it really bottomed out twice and then reversed.

The worst time of hiking rate is over

Judging from the performance of the 10-year US bond yield, the market's valuation of interest rate hike/tightening has been fully fulfilled after July.

There is limited room for interest rate hikes left by the remaining three FOMC in the year, and with the sluggish oil price in the past two months, inflationary pressure will probably ease.

In fact, after the three-month interest rate hike in May-June-July, the yield of US bonds all price in the bear news, suggesting that the interest rate prospect/topic is coming to an end.

After the hype of the old topic is finished, it is natural to connect the new topic. At present, there are several directions that deserve everyone's attention. One is the recession topic in the United States and the reverse of monetary policy (interest rate cut). However, from the actual situation, it is not a good option to hit yourself in the face repeatedly.

At present, the United States has not finished harvesting and re-entered the loose mode, which is difficult to maximize its interests. Moreover, in terms of worse model, even if the United States does enter a recession, other countries/regions may have a harder time.

The second topic is naturally the topic of China and the United States, which is also an unavoidable direction that we always thought before. However, this is not convenient for discussion. It can only be said that if this becomes the focus, gold has a great chance to become a safe haven.

The third comes from the situation in Russia and Ukraine, which is somewhat forgotten by the market. After the fanfare of the first quarter, it seems that there has been a period of silence in recent months. But don't forget that winter will come in Europe after the second and third quarters. For NATO countries and Russia, this winter may not be easy. NATO can't stand it, and the outcome may be relatively stable. However, if Russia is forced into a hurry, it can't rule out a new round of geographical topics heating up.

Taken together, these variables are generally beneficial to gold. However, as the opening said, before there is a clear flip signal on the technical side, you can be prepared, but there is no need to rush back to the battlefield. When the trend is established, there is plenty of upside. Optimistic about gold, waiting to open positions again.

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