Gold climbed this week because investors changed their minds about what the Federal Reserve might do. Not what the Fed said it would do. What investors think the Fed might do. Based on vibes.
The metal doesn't care about rate hikes. It cares about what traders believe about rate hikes. Which changes every seventy-two hours. Last month they were certain rates would spike. This month they're scaling back those bets. Next month they'll reverse course again and act like they knew it all along.
This is the first weekly rise in a month. Meaning gold fell for three straight weeks while the exact same Federal Reserve existed, made the exact same statements, and published the exact same economic data. But this week the collective consciousness shifted. The charts responded. Retail traders checked their portfolios and felt smart.
They'll claim they saw it coming. They'll post about conviction and thesis validation. They'll forget they were underwater for twenty-one consecutive days watching their position bleed while refreshing Jerome Powell's Twitter feed like it contained the nuclear codes.
The technical setup was screaming oversold for weeks. RSI divergence. Bollinger band squeeze. Every indicator that actually matters was flashing green. But sure, it was the Fed rate hike bets. It was the pivot in sentiment. It was definitely not just price mean-reverting after getting stretched too far in one direction.
Gold bottomed because it stopped going down. It rallied because sellers exhausted themselves. The narrative came later, gift-wrapped by financial journalists who need to explain why squiggly lines moved up instead of sideways.
Next week the squiggly lines will move somewhere else and a different headline will explain why investors suddenly care about inflation data or unemployment figures or whatever excuse makes the price action sound intentional instead of random.
The metal went up. Your opinion about why is worth exactly what you paid for it.
Photo by Anne Nygård on Unsplash
Leave a Comment