TRADE UPDATE: Trimmed down 50% of my $NUGT position at $20.7 just now, for a return of +6.97%. Leaving the other 50% position in order to gain exposure for tomorrow. Stop-losses should be set relatively tight tomorrow, as volatility is bound to pick up and all the gains made so far could be wiped out if stop-losses are set too loose.
Gold and Gold Miners surged this morning as predicted, with $GDX gapping up around 0.3%. This provides a good opportunity to assess your position size before the slew of catalysts come out tomorrow.
3 catalysts to watch out for tomorrow:
1.) Consumer Price Index data – measures inflation through tracking consumer prices. If inflation is higher than expected it could further drive the bullish momentum for Gold, since Gold is a hedge for inflation and also negative market sentiment. The longer term effect however can vary. If inflation starts rising, the central bank will be forced to start raising rates once again, which decreases the attractiveness of Gold.
2.) Brexit voting outcome will be decided tomorrow. The best case for the UK would be an approval of the extension on the Brexit deadline, in which case businesses can freely trade a while longer and more time is given to strike a proper trade deal after the exit is complete. The worst case is the extension is denied and exit occurs without the proper trade policies, which will no doubt slow down the EU economy even further as businesses try to adapt. This will have a positive effect on Gold as a safe haven asset.
3.) The Fed’s meeting minutes will be released tomorrow. We should expect to see notes that’re consistent with their attitude lately, meaning more dovish sentiment and will likely keep the rates flat for the next quarter at least. This will help support Gold prices since a dovish Fed means there’ll be possibility for a rate decrease, which helps drive Gold up.
As I mentioned today in my most recent TradingView post, when there are many high impact catalysts happening in a short time frame, it becomes harder to predict the direction of the short term trend. Therefore my personal opinion is that it’s more of a gamble tomorrow than trend analysis, so if you don’t want to or cannot afford to be exposed to a big position, then I would recommend trimming down your position size given today’s positive price momentum. If you’ve been following my predictions for the past week or so, you should still have a healthy 5+% on $NUGT to realize.