Trade Alert

Gold Trade: Time to take Profits

_{Posted by Club Member JPT_Stanley 4.9.23}

Gold price has been rising over the past year. Like many others, the gold trade made a ton of sense to me as well when inflation was high, but I think it’s time to close the trade and take the profits.

Historically, Gold and real yields move inversely to each other. This makes sense, when inflation is higher than nominal interest rates, the demand for gold increases, leading to higher gold prices.

I think inflation will continue to trend lower, but at a slower pace, while the Fed, being wary of easing too quickly, will keep rates higher for longer, meaning real yields may stay higher.

Assuming that the historical relationship between gold prices and real yields continue to hold, rising real yields will put downward pressure on gold. So, perhaps gold prices have seen its highs for this market cycle.

#Gold #Sell #Market Timing #Trading

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