{"id":2111,"date":"2024-07-05T11:43:00","date_gmt":"2024-07-05T11:43:00","guid":{"rendered":"https:\/\/jwilsonpaving.ca\/wilsonfarms\/?p=2111"},"modified":"2024-07-05T11:43:01","modified_gmt":"2024-07-05T11:43:01","slug":"would-low-pce-index-take-gold-to-the-moon","status":"publish","type":"post","link":"https:\/\/jwilsonpaving.ca\/wilsonfarms\/would-low-pce-index-take-gold-to-the-moon\/","title":{"rendered":"Would Low PCE Index Take Gold to the Moon?"},"content":{"rendered":"\n

The PCE Index<\/strong><\/a> statistics were released today and you might wonder what impact they will have in the price of gold. <\/p>\n\n\n\n

Let\u2019s dig in.<\/p>\n\n\n\n

One might think that PCE is a critical driver of gold prices (and thus you might be concerned with what the number are going to be), and there is some truth to it, but looking at how those reports have indeed influenced gold price provides extra context to what might seem obvious.<\/p>\n\n\n\n

Oh, and why am I discussing this particular statistic? Because the Fed told us on numerous occasions that it\u2019s the statistic that they view as particularly important. Therefore, based on what the PCE numbers are going to be, investors might expect the Fed to cut (or not) interest rates in the future. And since the markets are forward-looking, those expectations are likely to already drive price moves.<\/p>\n\n\n\n

What might seem obvious is the following:<\/p>\n\n\n\n

If inflation (as measure by the PCE) is below expectations, gold will go up significantly, and if inflation (PCE) is above expectations, gold will go down significantly.<\/p>\n\n\n\n

Seems to make sense, but let\u2019s remain skeptical and let\u2019s check.<\/p>\n\n\n\n

\"A<\/figure>\n\n\n\n

The red lines mark the cases when PCE was below expectations, and the green lines mark the cases when PCE was above expectations.<\/p>\n\n\n\n

What happened in reality?<\/p>\n\n\n\n

PCE below expectations: <\/p>\n\n\n\n

In 2 out of 6 cases, bullish implications<\/p>\n\n\n\n

In 3 out of 6 cases, bearish implications<\/p>\n\n\n\n

In 1 out of 6 cases, unclear expectations (late March 2023 \u2013 first a move up and then a bigger move down)<\/p>\n\n\n\n

To sum up, PCE numbers below expectations had mostly bearish implications<\/strong>, even if the immediate-term or short-term reaction was bullish.<\/p>\n\n\n\n

PCE above expectations:<\/p>\n\n\n\n

In 1 out of 3 cases, bearish implications<\/p>\n\n\n\n

In 2 out of 3 cases, bullish implications (one of them was rather unclear \u2013 in late April 2023, we first saw a short-term upswing and then a medium-term downswing)<\/p>\n\n\n\n

To sum up, PCE numbers above expectations had mostly bullish implications<\/strong>, but it wasn\u2019t particularly clear.<\/p>\n\n\n\n

Overall, PCE is a rather weak indication of the direction in which the gold market is about to move, and in general PCE below expectations tends to have bearish implications for gold and PCE above expectations tends to have unclear or slightly bullish implications.<\/p>\n\n\n\n

It\u2019s a rather good indication that we likely have a turning point in gold right now, and it might be best to determine the direction in which gold is about to move based on other factors.<\/strong><\/p>\n\n\n\n

After I sent out today\u2019s early heads-up Gold Trading Alert, in which I wrote about re-entering short positions in gold (with gold at about $2,347), gold moved slightly higher when PCE was released and now it\u2019s turning south again.<\/p>\n\n\n\n

\"A<\/figure>\n\n\n\n

Why did<\/a> I do it? Because on a short-term basis gold already completed the<\/a> rebound that was likely to happen. Gold reached its declining resistance line and since this line helped to keep gold\u2019s rally in check on June 20, it was likely to do the same today. And that seems to have happened.<\/p>\n\n\n\n

Of course, that was just<\/a> a very short-term indication.<\/p>\n\n\n\n

There are multiple techniques that point to lower gold prices in the following weeks, and in today\u2019s analysis, I\u2019d like to show you three that point to the $2,200 or its proximity as the next target for gold\u2019s rebound.<\/p>\n\n\n\n

\"A<\/figure>\n\n\n\n

These techniques are:<\/p>\n\n\n\n