Transcript of Gold is Sending a Warning.
TraderNick
0:00What in the world happened with gold0:01here today? A huge pop this morning0:04followed by a equally large decline, at0:07least at the time of recording this0:09video. Did gold flip bullish? Did it0:11flip bearish? A lot of economic data0:13came out this morning. And hopefully in0:15today's video, we can break that down,0:17keep it simple, and talk about the macro0:19plus price trends and where gold may be0:21going next. As we get started, remember0:23this is not financial advice. Trading is0:24high risk. Please be careful.0:28Okay, so first I'll give you an update0:29on my position. I'm still short and0:31actually uh today's economic data. While0:34some of it was more bullish for gold,0:37other aspects were quite bearish for0:39gold. So in today's video, we're going0:40to take both a technical and macro view0:42of precious metals. And then we'll also0:44take a look at the dollar and we'll talk0:46about stock market indices as well.0:47Worth mentioning before we get into the0:49gold market too specifically, bond0:51yields continue to move higher, pretty0:54much unmoved by the PCE number that came0:56out this morning. And oil prices are up0:59a little bit here today, up around 2%.1:01Stocks are mixed to slightly green at at1:03least at the time of recording this. And1:05the dollar index is flat on the day.1:08Okay, so yesterday I talked about how1:09gold was a little bit due for a bit of a1:11a bounce following the really large drop1:14that we had and we have continued to see1:16that so far. The question is, is this1:18just a bounce before the sellers1:20continue or is this a bounce that turns1:22into a market rally for gold? And I have1:25leaned a little bit more on the former1:27there. I think that this bounce is1:28likely to get faded by sellers. And so1:32as price pulls back, a couple levels1:33that I'm watching are the 50% and 61.8%1:368% retracement zones. If we break clean1:39through all of these resistance areas1:41and actually break back above 4260, I1:44will walk away from my trade completely1:47and move on to the next idea. Would it1:49be a little disappointing given that we1:50had such a nice move lower? Yes. But1:52ultimately, I mentioned this in my video1:54yesterday. I'm a trend follower. I1:56follow momentum. And so, the trade that1:58I'm really looking for is the one that2:00keeps going. And that may be this one or2:02it may not be this one. But that's what2:04I'm shooting for when I take trades is2:06to catch the rare instance in which the2:10chart that I'm trading goes and it goes2:12and it keeps going, not take profits2:15quickly every time it moves in your2:16favor. Because what this inevitably2:18tends to do is it starts cutting off2:20your big winners. And that's something2:22that for me personally I found is my2:24biggest strength as a trader is holding2:27on to some of the really strong ideas2:30that I get really right. Now I'm not2:32always right. In fact, ask anyone uh who2:33has watched my videos for a while. I'm2:35not right all the time. I have a pretty2:36low win rate in my trading strategy and2:38yet I'm still able to make money2:40long-term because when I catch the right2:42move and can hold on to it for the full2:45length of the trend, there is a massive2:47potential gain sitting there waiting.2:49So, of course, we'll see if that's this2:51one or if it's another trade, but I am2:53still short gold here. And let's talk a2:54little bit as to where I would get uh2:57kind of taken out of this position. So,2:59I've already uh mentioned that I went3:01short last Friday and price completely3:04fell apart on Sunday into Monday and now3:06we're seeing the bounce. I would like to3:09see for me to stay in this trade. Uh3:11gold to continue what it started last3:13week, which is a fall-off in precious3:16metals. Uh weak retracements. I like to3:19see that. Really strong retracements I'm3:21okay with as long as we don't break3:23through major zones of resistance. So3:254260 is kind of my line in the sand as3:28to where if we break clean through that3:30area. I need to get out of this3:31position. It no longer was the trade for3:33me. And that's pretty much all there is3:35to that to the technical side of3:37managing my risk on this position. Uh so3:40we're in a good spot. We're in profits3:42on this trade. I'm looking for a3:44follow-through move. And again, I just3:46want to reiterate how most of my trading3:48career I would want to take profits3:50really quickly. And there's nothing3:52wrong inherently with that. It's just3:54preference. Some people take small wins3:56often and that's their style, but for me3:59in my trading, I prefer to go for the4:01rare instances where the trade just goes4:05crazy in one direction and it doesn't4:07happen very often. And most of the time4:10it looks silly trying to catch the4:11really large winner, but then the final,4:13you know, outcome is that big one4:16finally makes its way into uh the the4:19account and that kind of pays for all4:20the losers and significantly more. Okay,4:23so so far the 50% retracement looks like4:25it's trying to hold. I would not be4:27surprised if today we continue to see4:28chatter back and forth. And if we do4:30rally back up into the 61.8%4:32retracement, again, I'm not going to do4:34anything with the trade. I'm going to4:35continue to hold it. That said, what I4:37would like to see from the bare side4:39would be on an intraday basis, you kind4:41of have this level of support right4:43around this 41804:46area that we're kind of testing. I'd4:48like to see if that thing can actually4:49break to the downside. That would be a4:51clean idea for the intraday traders to4:54see the lows of the g of the day get4:56taken out and we actually start breaking4:58through them. So let's now take a look4:59at the macroeconomic data. So gold is5:01still getting a bearish rating overall.5:04In fact, today's readings mostly5:06supported the gold bearish thesis. Let5:09me explain. So let's start with the5:10things that did not support the bullish5:12thesis for gold. PCE came in at 3%. I'm5:15sorry, the bearish case. This was5:17actually bullish for gold. PCE coming in5:19lower than expected probably helps to5:22soothe expectations about the Fed5:24interest rate hike worries that gold has5:26had. Right? Gold's been selling off big5:27time because expanding probabilities5:30that the Fed is going to hike hike hike.5:32Well, cooler inflation sort of backs5:35that up. It says, "Hey Fed, you can5:36chill. You don't need to rate hike as5:38aggressively." However, EdgeFinder AI5:40summary gave this a C-grade, which is5:43kind of interesting. And let's scroll5:45down and take a look at what's kind of5:46underneath the hood here. So services5:48spending rose by approximately 86.25:51billion in July. Headline PCE inflation5:53increased 2% month overmonth. Core PCE5:56increased 2% month-on-month. Personal5:58income increased 115.1 billion or 4%6:02while disposable income rose.5%.6:05On the downward or cooling side of6:06things, good spending fell by6:08approximately 49.9 billion in July. But6:11this morning, we also got some other6:12economic data which I think is more6:14supportive of a strong dollar thesis.6:17Check this out. GDP growth came in much6:19higher than expected. Forecasts, as you6:22can see by our yellow dot here, were6:241.5% for US GDP figures. They instead6:28came in at 2.2%.6:30A pretty meaningful beat on economic6:32expansion. We've talked about this theme6:34here recently with PMI numbers also6:36beating expectations, which is a6:38forward-looking indicator of the6:39economy. both services and manufacturing6:42PMI data points are sharply higher than6:46basically the growth decline line which6:49is the 50% or the 50 level. So overall6:52we see growth in the economy being6:54forecasted ahead and showing up in the6:57GDP numbers and so you have this6:59situation where that continued expansion7:02of the economy uh may continue to7:04support a strong dollar. Now, I7:06recognize, as I've been saying every7:08time I point this out, that the state of7:09the consumer is not great. We actually7:11did see consumer confidence numbers here7:14that were not super supportive of this7:16thesis. Uh, but remember that the7:18economy for the average person is not7:20necessarily the output of the overall7:22economy. Businesses in America are super7:25profitable right now. They're expanding.7:26Earnings growth are off the charts right7:28now. And so I don't know where that7:30ends, but right now again there's a7:32story of two markets where you have the7:34state of the average consumer not7:36necessarily doing fantastic and yet the7:39actual kind of output of the economy7:41looks good because a lot of businesses7:43and wealthier classes are doing7:45phenomenal. And again that gets people7:46all sorts of upset when I say that. I'm7:49just pointing that out though that at7:50the end of the day the output of the7:52economy makes the dollar look strong.7:53And just for the record, I think that7:55the status of how people in an economy7:57are doing matters a lot. It's just that8:00from a market's perspective, the output8:03of the economy sort of trumps how the8:05average person's feeling. Consumer8:07confidence here came in way lower than8:08expected. Actually hitting the lowest8:10level, I believe, since 2014. So8:13consumers definitely are not feeling8:15exceptional. But arguably, there are8:17some things here that are not all bad.8:19Like for example, the ADP number showed8:21strong hiring for last month, which came8:23out today. So you have more data that8:25suggests perhaps there's some economic8:27pickup that's coming in the future8:29because we've seen, okay, here's some8:31good hiring. We have the PMIs looking8:33solid. Uh and you know, as long as8:36inflation doesn't blow out completely8:37and people have jobs, maybe the economy8:40can continue to chug along and hopefully8:42improve even for the average person as8:45well as the overall output. But when8:47taken into consideration, all this sort8:48of suggests why the dollar has been so8:50strong. You've had a lot of economic8:52data that has increasingly beat8:54expectations. And so, check this out.8:57Gold has gone even more bearish here in8:59recent days, uh, with a very bearish9:02reading showing up now. Again, all that9:04strong economic data figures are making9:07the reading within EdgeFinder even more9:09suggestive of bearishness for gold.9:13Let's just highlight some of the things9:14that we just got done discussing. Uh GDP9:17growth beat expectations. That's bearish9:19for gold. It's strong dollar, bearish9:21gold. The ADP number came in well above9:24expectations. That's bearish for gold.9:26It's bullish for dollar. Yields continue9:28to rip higher. That is another bearish9:30pressure on gold in the short term. And9:32as I mentioned, those PMIs uh services9:34PMIs were stronger than expected,9:36bearish for gold. While manufacturing9:38was a little softer than expected, which9:40is bullish for gold. We also have been9:41talking about on the channel a lot how9:43crowd sentiment has been very bullish on9:45gold giving a really nice contrarian9:47bearish signal which also factors into9:49our sentiment score within EdgeFinder.9:51Macroeconomic data continues to point9:53bearish and this has been a really good9:55call from Edgefinder which flipped9:57bearish as of uh September 25th. Today's10:01video is sponsored by Ola Prime. Whether10:03you're a futures trader, a forex trader,10:06a gold trader, whatever you are, Ola10:09Prime has one of the widest selections10:11of trading account types for their10:13traders. They offer a lot of opportunity10:15to scale into larger accounts over time10:18and offer some of the most competitive10:20pricing that I've seen in the prop firm10:21space. And to make it even more10:23competitive, with our promo code A110:25trading, you can get 20% off any of10:27their account types. 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Prop firms are an excellent11:15way for experienced and skilled traders11:18who lack capital to potentially scale11:20things up. If you're interested in11:22exploring Ola Prime, use the link below11:24and take your time to review all of the11:26different terms and conditions to make11:27sure this is the right prop firm for you11:29and your trading style. Thank you to Ola11:31Prime for sponsoring today's video. Now,11:33back to the content. And when Edgefinder11:34flipped bearish, so did I. I mean,11:36September 25th was right here on that11:38Friday, which is when I basically11:40shorted. So you can see we shorted gold11:42there right before it was able to fall11:44off a cliff. And what's nice here is11:46that not only did it flip bearish, but11:49score has continued to trend on11:51edgeinder in the bearish direction. So I11:54do like the short side for gold. I'm11:55going to stay with this and I'm11:56open-minded to new information. Like if11:59non-farm payrolls this week come in12:01super weak versus expectations if yields12:04start to cool off. Look uh somebody12:06pointed out they're like Nick in in two12:08weeks time you'll be bullish on gold and12:10you'll look silly. And um you know I12:13follow a system here. What you're12:14looking at is not bias or opinion or you12:18know basically me just willy-nilly12:20changing my mind every day. I'm12:22following my system, which I think every12:24trader who's listening to this should12:26have their own system and stick to it.12:28And you might have a bullish reason for12:30gold where I have a bearish one. And12:33that's perfectly fine. We can be12:34harmonious in the sense that as long as12:36we're both sticking to a system that12:37long-term makes money, I have all the12:39time conversations with people who have12:41opposite trades on than me and we both12:43do fine in the end. Even if sometimes12:45I'm right, sometimes they're right. And12:47in the end, it matters if you're12:49sticking to a system that has an edge.12:50You're not going to win every trade.12:52Nobody is. Uh but so far, this gold12:54trade is working well. And in my book,12:56something that's working well, I hold on12:58to. And something that's working poorly,12:59I get rid of. So, yes, it is possible13:02that in two weeks time I flip to bullish13:05on gold again. But right now, I'm13:08following the trend. Price is moving13:10lower. Macroeconomic is economic data is13:13trending in the direction of the bears.13:15And so, I will follow the plan and stick13:18to that thesis. And again, this goes13:20back to something I've been saying on my13:21channel a lot recently, which is having13:23the uh humility to just follow trends13:26has been a much more effective path for13:29me in trading than trying to make13:30predictions all the time. Which is why13:32I've built EdgeFinder the way that we13:33have here at A1 is to be a trend13:36following vessel. It follows all of the13:38macroeconomic data. It follows13:40sentiment. It follows trend. And it13:42basically builds a bias automatically.13:45And having something like this13:46mechanical is really key for me13:48personally. I don't know about you, but13:50when I don't have something like this,13:53my mind wanders. I'm like, "Oh, well,13:55gold, they're going to fake us out and13:56then it's going to do this or I think13:58that they're ultimately pushing it down13:59so they get better prices." I left all14:01that behind many years ago and for for14:04the best. I think just having a system14:06that is mechanical that I just follow14:09with humility and acknowledge that hey14:11this thing went bullish then I got out14:13of my positions because it went you know14:15basically flipped bearish flipped14:17bearish and now I'm in a decently14:19profitable position not by attaching ego14:22to having wanted to be right about being14:24bullish a couple weeks ago but instead14:26following my rules following my system14:30and just humb humbly submitting to the14:31market. Okay. Yes, new information14:33changed my thesis. Follow the trends.14:35Follow the data here. And that has been14:38for the best. And it's not perfect all14:40the time either. Sometimes you flip your14:41bias and that was the wrong thing to do14:43too in hindsight. But in the long run,14:46over many repeated iterations, I found14:48that following my system tends to work14:51out better in the long term than14:52abandoning it. Anyways, if you want to14:54try out the tool that I'm using here to14:55follow macroeconomic data as well as14:58technical trends and crowd sentiment14:59tools, check out EdgeFinder. I'll leave15:01a link in the description down below if15:02you want to try it out or you can scan15:04the QR code that you see on the screen15:05right now. Get all the information about15:07how our tool functions. We offer a free15:09course on how to use EdgeFinder to find15:11better trades and much much more. If15:13you're looking to implement macro15:14fundamentals and track what institutions15:17are doing as well as what crowd15:18sentiment is up to in a particular15:20market, it's not just about gold. We15:22have many things. We have currency15:23pairs, commodities, indices, etc. that15:26we track all within this tool. So, let's15:28talk a little bit more about the dollar15:29from a technical perspective. We are15:31coming up to a level that I think is15:32worth keeping an eye on. This previous15:35high has broken my heart one time15:37before. I was bullish on the dollar over15:39here for some time and thought that we15:41could finally get up and over this 101.815:44or 102 level and we ultimately did not.15:47We faded back down. Though to the credit15:50of the bulls, it was ultimately one15:52large pullback it looks like and15:54actually we bottomed out before going15:56back to these lows. The dollar index to15:58me looks poised to try again here and I16:01would not be shocked at all with yields16:03rising seemingly every week uh if the16:06dollar index does move higher on uh the16:10promise of more rate hikes. That's kind16:11of what I'm thinking here is going to16:13happen. And I would not be shocked if16:15you wake up one day and DXY is well16:18above the highs. Um again, maybe that's16:21non-farm payroll day. Maybe we top out16:23on non-farm payroll day. My bias leans16:26directionally more thinking that the16:28dollar continues higher and uh again16:31adjusting thinking if we're wrong. So16:33Nick, what if non-farm payroll comes in16:35weak and yields start to fall and16:37there's a conflict resolution in the16:39Middle East and we get a ceasefire deal,16:41then maybe it's time to adapt. And16:43there's no shame in that, right? Again,16:46people are looking on the internet uh at16:48at traders like myself or content16:50creators uh assuming or anticipating16:52that we have some sort of magic ability16:55to predict what's going to happen in16:56markets. And I always thought that too16:58when I first got into this stuff. Oh, so17:00and so with a big YouTube channel and17:02they must be a profitable trader. They17:03must know what's going to happen. Uh and17:05I would be frustrated when I would see17:06them be wrong. And then I realized years17:09and years later that it's not about17:11being right all the time. It's about17:13when you are right, capitalizing and17:15when you're wrong, cutting quickly and17:17licking your wounds, getting ready for17:19the next idea. Stocks are also17:20rebounding here a little bit. They like17:22the cooler inflation story, but uh the17:24other thing that they like is that GDP17:26growth still seems to be holding up17:27nicely. I mean, think about this.17:29Today's data was fairly good for stocks.17:33You have a situation where jobs are17:36still going on. That's good. You have17:38GDP data that came in solid. That's good17:40for corporate earnings and inflation was17:42cooler than expected. While that's not17:44all good for gold, it is pretty good for17:47stocks. And so I wouldn't be surprised17:48if today's data actually more positively17:51impacted uh the readings that we have on17:53S&P 500. And there you go. We've17:55actually gone from what was more of a17:57bearish reading in the last few weeks to17:59now going for the first time neutral on18:01stocks. Very interesting to see that18:04flip. Same with the Russell, which had18:05had a very bearish reading going into18:08like early September. has cooled off a18:10little bit, but still getting a modest18:12bearish reading. From a technical18:13perspective, I'm super neutral on18:15stocks, though, because this thing just18:17keeps chopping around. And this is why I18:20am personally pretty thankful that I18:21don't just trade one chart, is that when18:24something you watch goes into range18:26territory as a trend follower, that's18:28super irritating to trade. So, I'm glad18:30that I've been not too focused on stocks18:32recently and instead really focusing on18:34commodities where I feel like there's18:35been some good trends and watching the18:37bond market. Speaking of the bond18:38market, take a look at the yields. Uh18:405.25% on the 10-year. And to me, as much18:44as this does look like it is stretched18:46to the upside, I don't want to call a18:49top on yields. I think that yields can18:51continue. Um I wouldn't be surprised if18:53you get noise in between, but my path of18:56least resistance for yields, generally18:59speaking, continues to be higher. I19:01mean, let's think about today's data.19:03Yes, PCE was a little cooler than19:05expected, but let's not forget that you19:08still have rising oil prices which are19:11inflationary for the future. You also19:13have economic growth that is19:15expansionary and the AI trade is still19:17alive and well. As long as you have, you19:20know, those recipes still there, right?19:22Here's semiconductors modestly higher19:24today and continuing to show19:25improvement. This AI buildout, this19:27competes for the available supply of19:30debt on the market. So let's think about19:32this. Not just the US, but Japan and all19:35these other places, they want to borrow19:37money. These they need to borrow money.19:38Governments need to borrow money because19:40they're all in debt and need to, you19:42know, keep expanding their their19:43borrowing um and printing of of19:46currency. And so the bond market is19:48like, okay, well, we want more19:49compensation for that higher anticipated19:52fiat printing. You also have the MAG719:55lending money um out to or I'm sorry,19:57borrowing money from from, you know, the20:00debt market. And so they're on the20:02market too. They're like, "Hey, you20:03know, we want to borrow money from you.20:05We'll give you XYZ yield." And so20:07there's this competition in borrowing20:09land where there's a lot of people who20:11want to borrow money and not as many20:13people who want to lend money. So that's20:15why yields continue to move higher. It's20:17one of the reasons, right? There's20:18anchored inflation due to the conflict20:20in the Middle East, which is uh at least20:22seemingly nowhere near finalizing. Maybe20:26we get a ceasefire at some point, but20:27it's so hard to predict that oil prices20:29are, you know, still up in the 90s. So,20:32it's a tricky dynamic. And so, I think20:34that the path of least resistance for20:36yields until something breaks or changes20:39in the system is for yields to keep20:42moving higher. Uh, we'll see how long20:44that lasts. I don't I have no idea how20:46far yields go, but for me, they trend20:48they're trending higher. I think that20:49trend is set to continue until uh20:51something drastic changes. Trading20:53fundamentals can be a lot of hard work,20:56but we actually made a pretty cool free20:58Telegram channel where we are publishing21:00constantly updates on what is going on21:03from a macro fundamentals perspective.21:05And no, it's not AI. It's not written by21:07a robot. It's written by a real person21:09on our team. His name is Allan. He puts21:11together a report each day on what is21:13going on in things like gold, currency21:15pairs, commodities, indices, etc. on a21:18global financial fundamental analysis21:20basis. It's a really cool newsletter21:22where you can basically stay on top of21:24things by reading for like a minute per21:26day if that would be interesting to you21:28to join the free telegram channel. There21:30is a link in the description down below21:32on this video that you can join and get21:34into the action there. We also offer21:37special discount perks for our products21:39as well as for funded accounts and for21:42brokerages etc. And we also do some21:44giveaways as well. So definitely take a21:46second to join the Telegram channel in21:48the description down below. I also want21:50to take a second to just genuinely thank21:52you for supporting my content here. Make21:54sure to subscribe and hit the thumbs up21:55button if you have not already. And I do21:57hope that more videos in the future will21:59continue to help you on your trading22:00journey. Good luck. Thanks for watching.
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