The Federal Reserve’s statement that they have detected a strong and consistent “federal funds” (currency) flow from foreign investors, especially during the first two months of this year, is a confirmation of what we’ve been saying all along – there is an impending “hard landing” in gold prices. Although we haven’t had much time to analyze the details of their analysis, a pattern is beginning to emerge that bears watching.
The central bank is looking for signs of possible or confirmed breakouts into the financial system. The next big event could be the Federal Reserve’s first rate hike in over six years. This will likely be followed by another one, which could come just before the end of the year. As the economy continues to expand, more stimulus is being provided to banks and businesses to keep the economy growing and to avoid a “recessionary” fall in gold prices.
There is no way to know when the Fed will decide to take action, but it is best to be ready, because the market is not going to wait for the central bank to make its next move. The market will react to the news and will take immediate action when the market believes the economy is headed down the hill.
Gold is likely to continue to fall because there is no solid evidence that it has bottomed. The price is below the level at which it is priced for future recovery. Gold has been trading on margin in the face of weak markets in the past, and it may do so again when investors realize that the central bank cannot deliver the promised economic growth. Investors will continue to liquidate their positions and make room for new ones, and the gold price will continue to drop.
If you are concerned about the gold price continuation pattern in focus, there are three things you should watch closely. First, the government will probably provide yet another stimulus package to try to prevent a recession. Second, the Federal Reserve will increase interest rates, perhaps as soon as today, although there is no guarantee.
Third, the central bank will tighten its monetary policy further, and the gold price may take a nosedive. if the Federal Reserve is unsuccessful in its attempts to stimulate the economy.
If the gold price continues to fall after the fed announces tightening measures, don’t be alarmed. It is common for currencies to drop in response to news, but most governments around the world continue to trade with the dollar.
The best thing you can do right now is trade with the expectation that gold prices are going to continue to drop in the short-term. If you trade with the hope that the central bank will ease its monetary policy, you will lose money on all your trades.
The best thing you can do right now is trade in currencies with the expectation that the central bank will tighten its monetary policy and economic growth will return to normal. You will be making money on all your trades if this prediction comes true.
The most important part of the gold price continuation in focus will occur in two weeks. When the Federal Reserve begins to reduce its bond purchases, the gold price is likely to begin falling.
As the central bank tightens its monetary policy, the gold price is expected to continue falling. The gold price is going to fall because it is a physical asset that the central bank does not want to hold on its balance sheet, and, but does not want to buy from individual investors.
The best time to invest in gold and hold on to it when you see the gold price falling is between two weeks and six weeks following the FED meeting. The next week will see a rebound in gold prices and you can pick up a nice profit from this period. The gold price will return to its trend line and the end of the cycle will lead to stronger returns.