To The Moon

Operation cycle of gold price

Since April 18, 2022, the high point of gold price has shown regularity, with stage high point (top) appearing every 39-44 trading days. At present, there have been six consecutive such cycles. If we want to explore the reasons, it is more about trading behavior and financial behavior. If the current macro background is not broken, the cycle will continue.

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What is the current macro background?

To put it simply, the market constantly switches between two expectations-hard landing or soft landing.

Hard landing scenario will trigger interest rate cuts, and the yield of US bonds will drop sharply.

Soft landing scenario the US economy perfectly avoids recession and enters the next cycle, with interest rate falling far less than hard landing.

The former is good for gold, while the latter will restrain the rise of gold.

Therefore, when rate hike expectations are strong, gold prices are suppressed, and when interest rate cuts and easing expectations prevail, the golden stage rises. Thus, the price trend forms bands and trends. Therefore, in early November last year, the current cycle of gold bottomed out at $1,618.3 and closed at $2,023.7 on April 6.

After the banking crisis in Silicon Valley in March, the market believed that there was a high probability that the American economy would enter recession, but I didn't know when, How and whether it would be accompanied by an economic crisis.

Then under this expectation, gold has only one way to rise. At present, the market has entered the speculation of when it will be the last rate hike and when it will enter the easing cycle of interest rate cuts. When the market realizes that the recession (easing) will not come soon, then the price of rushing will return to the matching position; The next economic data reminds people once again that the recession is not far away, and the nerves of market recession will be lifted again, and the gold price will rise again. Until the recession really comes, the expected interest rate cuts and easing really come.

In such a macro scenario, with our quantitative analysis technology and trading system, we can monitor the market, grasp the rising trend of gold, and adopt different option strategies to control the pullback/retracement, so as to smooth the capital curve.

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