Pegasus
Long/Short Equity Investor
Gold puts offer a way to trade tightening liquidity without fighting AI. Stocks are the only place where liquidity seems to have improved over 24 hours, whether that is a short squeeze, a dead-cat bounce or liquidity from Nebius's price hike and Jensen Huang's comments. Mid-October gold puts need only about a 2% move. x.comÂ
Gold's failure to rise even after rates pulled back decently challenges the earlier high-rate explanation for its weakness. GLD is close to fresh 11-month lows and just closed at a new 14-month low relative to the S&P 500. Gold has trended down since its parabolic January peak. x.com x.comÂ
Gold tends to perform poorly when liquidity contracts, while it performs best during recoveries. Gold looks likely to fall next year. x.com x.comÂ
Gold is extremely attractive now because rising market fear could make it a great hedge. It has fallen nearly 30% from its January all-time high and returned to the accumulation zone. If this level holds, expect a bounce soon. x.comÂ
Gold faces continued selling pressure as GLD records its biggest weekly outflow since March. November seasonality often favors gold, but gold is still not bullish beyond a bounce. x.com x.comÂ
Seasonality is unfavorable for gold over the next few weeks, adding to the intermediate downside case. Based on 30-50 years of data, this is not one of the preferred 70% zones and seasonality is only a confluence, never a standalone signal. Losing the $3,955 low opens a normal backtest toward $3,450; gold tends to bottom in mid-November and mid-March. A pullback to the $3,000 area, if it occurs, would be a long-term buying opportunity. x.com x.com x.comÂ
Gold looks to be starting a new uptrend after resetting, though it may need a bit more time, because the debasement trade is alive and well. Aggressive FX intervention and signals of 'whatever it takes' bond market management from Treasury Secretary Bessent support it, and there are valid worries these are band-aid fixes. x.comÂ
Gold is not immune to the liquidity drain hitting markets, and it is breaking below its 200-day moving average for the first time since 2023. Other commodities are not looking hot either. Fiat currencies eventually end up in the toilet and commodities scream higher, but the path there can be bumpy. x.comÂ
Gold now points toward a downside target, following the late-August exit signal laid out in the August 30 edition of Turning Points. x.comÂ
Gold and silver may benefit if yields ease a little further from their local high for a while longer. The FOMC meeting and minutes could be good for both. x.comÂ
Gold is hard to hold at a 0% yield while interest rates keep rising. @Mr_Derivatives notes gold's 3.93% drop at the close was the fifth-worst drawdown of the year, driven by rates. x.comÂ
