It's time to trade gold!
Fed meeting, banks at risk, gold at historic highs. What to watch out for and what to choose?
Friends, there is too much news in the market – let's not wait for Tuesday. The Fed meeting has taken place. The rate was expectedly raised, but the future of monetary policy is still murky. Meanwhile, dark clouds are gathering over the regional banks – it looks like another one is on the way, PACW.
What’s in the market: the last few days have seen a strong correlation between market declines and the growth of assets into which money is being moved. There aren't many of those right now: cryptocurrencies and gold. It is more complicated with the first ones – their role as defensive assets is not evident yet. The situation with gold, on the other hand, is different.
Gold prices have reached historic highs, the $2,000 level has been broken through with confidence, and so far all indications are that it will continue to rise. The main reasons:
- June 1 is approaching, an important deadline for reaching agreement on another increase in the national debt ceiling. The story is not new, but with the political crisis brewing, surprises are possible.
- The dollar is plunging amid a possible recession.
- Inflation is still high.
- Central bank purchases of gold are on the rise
- Technically, the 1800-200 range has been in play since mid-2020 and is about to be broken through
What to buy: there are plenty of options on UTEX to participate in the gold and gold mining rally, but we see ETF trading as optimal. GLD is the largest and most liquid gold ETF, moving well both intraday and suitable for carry overnight.
Fund your accounts and be aware of the risks!
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