The Bob Dylan Hedge 

The gold markets appear to be putting on the Bob Dylan hedge sooner than I expected and "taking shelter from the Phase 2 storm."
  
Gold is trading in a $1547.00-$1553.00 range so far and bids on! Unless we get a more on the nose type of surprise, like an explicit roadmap for a further rollback in tariffs strategic buying on dip should remain in place.
 
 The current level of "P1 tariff rollback, is unlikely to provide enough US domestic economic punch to shift the Fed hawkish. But the one "buyer beware" for gold bulls would be in the event central banks in general turn less dovish amid risk-on sentiment. Until that unlikely pivot, gold should head higher over time.
 
Given the differences between the US and China are so vast, it's likely worth hedging the tail that the P2 deal might not ever happen. After all, China seems to be adjusting well to life without the US demand impulse.

However, with trade becoming little more than a political mechanism in an election year, oh yea, another reason to own gold, who knows what going to happen on the trade war front. But its this inherent uncertainty that makes gold an excellent go too hedge.

As for macro, while the economic data is suggesting things haven’t got worse. Still, at the same time, it doesn’t point to a significant rerating of the economy — Friday’s NFP print the latest example of any bullish risk momentum getting snuffed out. So far this year, the tremendous global growth trade of 2020 has been a bust, and you don’t need to look much further for evidence than the resilient USD and sagging oil prices.

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