Yesterday, Janet Yellen and other Fed members refrained from raising rates and also cast doubt on future rate hikes, implying the economy may not yet be strong enough to sustain them.
On that, she’s right. But if she wanted to get one more rate hike done this year, to prove the Fed is serious about “normalization” – yesterday would have been the perfect day to do so.
Nevertheless, after the decision was announced at 2pm, gold rallied and managed to close above the $1,295 resistance level. In early morning trade (6:15 am EST), gold also rallied as high as $1,316.80 but has now pulled back to the $1,307 level.
Make no mistake: Tomorrow is critical for gold …
A. Should the August futures contract close above $1,307.70, then odds are that gold’s cycles are inverting and the late June period targeted by my AI models will turn out to be a high instead of a low.
That high would likely come in anywhere from the $1,368 level up to $1,450.
HOWEVER, once that inverted cycle high is made, then gold would trade lower for the balance of the year, still ultimately falling back below $1,200.
If, instead …
B. Should the August gold futures contract FAIL to close above $1,307.70 tomorrow, then we could be looking at a massive failure in gold. Gold trying to invert and extend its immediate gains, but failing to have the strength to do so.
In that case, the end of June/early July would remain a cycle low target, and gold could yet still crash to below $1,200 by that time period.
This would also indicate that the BREXIT vote is likely to fail, as there are huge gold buying bets being placed on a BREXIT win vote. If the vote fails, all those long bets would be dumped, plunging gold into a collapse very easily.
So what to do now? The short answer: Nothing until we see how gold closes tomorrow. If gold closes above $1,307.70 – then on Monday I will recommend you exit all bearish metals positions, and move instead into short-term bullish positions.
On the other hand, if gold closes below $1,307.70, you will hold your existing positions, perhaps even adding more – awaiting a failure that would take gold (and other precious metals and miners) much lower over the next two weeks, likely due to a failed BREXIT vote.
I know these have been tough times for the markets and even tougher times for your portfolio. The losses stink. We’ve had a bad run.
But always keep in mind that bad runs are almost always followed by good runs, and your time is not only coming, but also way overdue.
So I urge you to be patient, calm, objective, rational and strong. The way the markets are now shaping up, not just the metals, but also global stock and bond markets, other commodities, and more …
Virtually guarantees we will have an explosion of profits in this service in the second half of this year.
Best wishes and stay tuned,
Larry
Position Trackers
Click here for your Supercycle Trader position tracker.
Click here for your Alternative Recommendations position tracker.
