Why I'm buying gold now, before the FOMC

Author: Giles Coghlan | Category: News

Fed express

Ok, here is my take on the FOMC. 

Fed's Powell is unlikely to change any policy ahead of the US elections, granted. He is also unlikely to adopt negative interest rates (which would send gold soaring). 

So, what might he do? Well he might alter/clarify the Average Inflation Targeting scheme. That could be a bearish tilt. It's possible, but what if...What if he does nothing? Well that is the base case (see Eamonn's post earlier)

This is what I think will happen. Remember in June and July there was no policy change but a bearish reaction in the USD. In July Powell warned the US about the most severe economic downturn in 'our lifetime'. In June rates were steady but he kept the focus on a 'long road to recovery'. So today I am expecting either a dovish FOMC or a very dovish FOMC. 

Both will send gold higher, so I am entering the bullish triangle pattern early now. If the FOMC is not dovish then gold longs will be exited. 

That's my take on the FOMC and gold today. A bullish coiling triangle in the context of an uptrend is a classic breakout/continuation pattern. All that is needed now is for the FOMC to stick to previous form. To be continued...

Fed express
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