Daily Alert – Wednesday 1st July 2020: There is a reason traders are bullish on GOLD…
GOLD is on the rise despite the USD being flat and risk sentiment being positive. Neither of these two traditional drivers are aligned to boost GOLD (we would expect a weak USD and negative sentiment to drive GOLD upwards). So what’s happening? Well, the Fed are looking at bond yield curve control (YCC). Without going into gruesome detail, this is a means of capping the yield on bonds and hence the cost of QE. A likely effect of this will be to release funds from bonds and into other assets, particularly GOLD. YCC is not new. It was implemented in Japan 4 years ago and to some extent in other jurisdictions. The Fed are actively talking about implementing their own version and tonight’s Fed Meeting Minutes may shed some light on their thinking.
Other interesting stuff includes the drivers of EUR strength (despite QE which should have the opposite effect) and the future outlook for US equities. It’s all in the video.
I went long CADJPY on Monday night for reasons which should be obvious to you (see the video). So far I have made 1% and my capital is no longer at risk.
I’ll be back on Friday.
VIP Club members can watch the video HERE