Is now the time to 'buy the dip' in gold or wait? [Video]
|After an explosive run that catapulted Gold in striking distance of all-time record highs, prices have finally pulled back as trader’s bank windfall profits and get ready to capitalize on the precious metals next big move.
Once again, these incredible market moves have presented savvy traders with a series of highly lucrative opportunities to maximize on the massive macro-driven rally as well as the huge price reversal that has subsequently followed.
Is the rally over and has all the money been made?
Not by a long shot!
With terms like “Monetary Policy Failure”, “Credit Crunch” and “Recession” now dominating the headlines – traders have turned their attention to whether the U.S Federal Reserve will pause its interest rate hike cycle or continue to press ahead with another round of rate hikes next month.
It wasn't that long ago when Fed officials declared premature victory on inflation and labelled 2023 as the “Year of Disinflation”. Now policymakers are convinced that the economy is heading for a “Recession” this year – pressured by the most aggressive rate hikes in history, a global credit squeeze caused by the recent banking turmoil and persistent geopolitical headwinds.
In the coming days, traders will scrutinize every comment from Fed officials before policymakers enter a blackout period from April 22, ahead of their highly anticipated FOMC meeting on May 2-3.
What Gold traders really care about now is how fast the Fed pivots on interest rate hikes. Traders expect the Fed will raise rates one more time in May – by another 25 basis points to a target range of 5%-5.25%. But after that, pause or even cut rates fairly quickly in the second half of this year.
That in itself presents, a huge bullish tailwind for Gold, but here's where it gets even more exciting.
As the Fed inches closer to the end of their current rate-hike cycle, the ECB has only just started. ECB rate hikes will enviably strengthen the Euro and inversely weaken the U.S dollar, which ultimately suggests that new record highs could be on the horizon for Gold prices ahead.
Whichever way you look at it, one thing is clear. The stars appear to be aligning for Gold – firmly positioning the precious metal on track for its biggest year ever since the since the Global Financial Crisis in 2008. That’s welcoming news for the bulls, but painful for anyone sitting on the sidelines, who must now decide how much FOMO they can handle.
Where are prices heading next? Watch The Commodity Report now, for my latest price forecasts and predictions:
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