Jordan Roy-Byrne – Will Gold Move Higher On Fed Rate Hikes If We Don’t See A Corrective Move First?
Jordan Roy-Byrne, Founder and Editor of The Daily Gold, joins us to outline why gold may not have the rally many are expecting if we don’t see a correction lower first heading into the Fed rate hiking cycle. We discuss 3 potential paths forward for the precious metals based on whether 1) gold has one more capitulative move down prior to the rate hikes, versus 2) gold continuing to channel sideways into the rate hikes, or if 3) gold could sustain and upwards trajectory and break out higher in the event inflation readings keep coming in hotter than anticipated.
Jordan reaffirms that his expectations are that inflation has mostly peaked here, so the continuation move higher in gold seems like the least likely option, but we do dig in a bit more to the scenario where if gold trends sideways into the hikes that it will likely bottom after a few hikes and then turn higher when the market starts to anticipate in advance that the Fed will be pressured to stop the rate hike cycle and reverse course. The most ideal scenario is still corrective move leading into this central bank policy change.
We wrap up with thoughts on how watching the yield curve and action in bonds will be instructive for just how much wiggle room the Fed has, but note the risks they face by starting so far behind the curve and with inflation already have run so far beyond their initial expectations.