Transcript of Hawkish HIKE: Gold got Rekt.
TraderNick
0:00Today we have an absolute wipeout in the0:02precious metals. Gold is down sharply0:05off of what we saw today, which is the0:08hawkish hike. Now, let me explain what0:11this means for people who are maybe0:13newer to this concept of Federal Reserve0:15stuff and trying to gauge how it impacts0:17markets. Well, gold was positioned today0:20for one hike with some mixed outcomes of0:23potentially a couple more hikes or maybe0:24not some hikes. Well, today we kind of0:26got some confirmation of not just one0:28hike, but the Fed's expectation to hike0:31interest rates and to actually keep0:33hiking them into year's end. That is the0:36statement effectively that we got from0:38the dot plot uh which the dot plot is a0:41projection sheet showing where Fed0:42officials think interest rates are going0:44to go. Interestingly, it was far more0:47hawkish than expected. The Fed voted0:49unanimously to hike interest rates0:51today, showing conviction as a0:53collective group to hike the rates. Uh0:56this is an effort to fight inflation.0:58And obviously the dollar in response to1:00this shot higher. Now what you might be1:03thinking is, well, what about the1:04administration? They're not going to be1:05so happy about this because they wanted1:07this guy to cut rates. But remember the1:09Fed and Kevin Walsh did his role in1:11terms of on the podium announcing this1:13several times that the Fed independently1:15is focused on price stability, jobs1:18data, and I think he's building some1:20credibility with the bond market to be1:21completely honest. Like the bond market1:23here in reaction to this pretty much is1:25flat. Not a huge move higher, not a huge1:28move lower. Even though projections for1:29more hikes came in, we didn't see yields1:32sharply higher from here. And we can see1:34if we look at the 2-year yield, this one1:36is moving higher, but long duration uh1:38government bonds are sort of um giving1:41the okay to this situation to to an1:43extent. That being said, precious metals1:45lower here sharply today and back down1:47to the bottom end of this recent range1:49and my trade is looking increasingly1:51likely to get stopped out of it. And if1:53that happens, then hey, you know what?1:55It is what it is. In terms of my1:56expectations, calling myself out here, I1:58thought we would get more of a doubbish2:00hike from the Fed. But instead, at least2:03where we see them uh with their with2:05their kind of mantra around where the2:07economy is at, there was a doubling down2:09that the economy is healthy enough in2:11order to actually hike interest rates.2:14And this is kind of an intriguing2:15situation because we did get at least2:17today some more confirming data on that2:20front. Retail sales numbers came in2:21strong today. Uh services PMIs were2:24stronger than expected. So you can kind2:26of see the narrative forming here for a2:28little bit of a turnaround in the US2:29dollar. And that's where I think a lot2:31of this is stemming from as you have2:32this big breakout here from a technical2:34perspective to the upside here on the2:36DXY. Non-farm payroll did come in much2:39higher than expected showing a little2:40bit of resiliency in the labor market2:42which is part of the thing I think that2:44gave the Fed a little bit of room for2:46this interest rate hike. Now, the2:48question is, will we actually get2:50several more hikes from here or is there2:53a little bit of uh a jump to conclusion2:55here about the next few rate hikes?2:58Well, or rate decisions. Well, I think3:00it's fair to say that at least in the3:02eyes of the Fed, there is room for now3:04to hike interest rates. I thought what3:06was also interesting is that there was3:08not really a lot of discussion. There3:10was a little bit, there was like one3:11prompt or one question about, you know,3:13where oil prices are. Um, oil is not3:15something, as we've talked about on the3:17channel quite a bit, that the Fed can3:18control. And I want to lean in on this3:21because here's the thing. The Fed can't3:23control oil prices. He acknowledged as3:25much. He can't they can't control prices3:26of commodities and things like that. Um,3:29which is a huge input to inflation and3:31price stability and all the stuff that3:32they care about. That said, I pointed3:35out prior to the Fed meeting today that3:38while yes, monetary policy is leaning in3:40the direction of more hikes and we're3:42looking hawkish, that could all change3:44or increasingly so become more hawkish3:48if oil price goes up or down. If it goes3:50higher, that leads to more inflation3:51concerns. The 10-year probably rises,3:53the 2-year probably rises, and they3:55probably price in more hikes to sort of3:57do whatever they can to try and keep3:59prices under control. Meanwhile, if oil4:01prices were to drop sharply in the next4:03few weeks, if there was something more4:04positive out of the Middle East, some4:06development, some talks of a ceasefire4:08or some kind of promise of of hope4:11there. I'm not necessarily saying I4:12think that's going to happen because I4:13can't predict the future in the Middle4:14East, but if it were to happen,4:16understand that we very quickly could4:18see this multiple hikes in the interest4:20rate uh projections, lesser so, right?4:24So, there is still a lot of volatility4:26on this, but just take a look at4:27precious metals here. Even as I speak,4:29despite oil down almost 3%, you have4:31silver, gold down sharply here at the4:34time of recording this. Dollar is also4:36rallying hard. And so again, just4:38keeping an open mind to what is4:40happening here. Uh rates moving higher4:43aggressively. Monetary policy, at least4:45for the foreseeable future, remains more4:47in the hiking cycle camp. And it does4:50seem like this was a at least the4:52narrative was a hike with more than one4:54coming down the pipeline. And again, I'm4:56telling you this as someone who was out4:58here on YouTube talking about how I4:59think it's maybe a oneanddone or maybe5:01once and not too many hikes from here.5:03And yet, I'm having to update my5:04thinking in real time because that's5:06what trading is all about is cutting5:08losses when you're wrong about ideas and5:10moving on to the next one. So, we'll see5:11what happens. I think that if you're if5:13you're hanging on to the idea that the5:14Fed is only going to hike a limited5:16number of times, then, you know, you're5:19probably looking at this and saying,5:20"Well, I think the jobs market's going5:21to cool or something is going to5:22weaken." But right now to the credit of5:24the Fed or the chairman and and the team5:27there at the Fed uh there are some5:30stability points here within the data5:32that they're kind of leaning heavy on.5:34Again, retail sales PMI is in the5:36mid-50s is relatively stable. Economic5:38growth is still relatively strong versus5:40G7 other nations, right? They have 1.5%5:43GDP growth quarter. These are reasonably5:46healthy numbers uh that the Fed feels5:48they can uh potentially put at risk for5:51the for the greater good in their eyes5:53which is uh squashing a bit of the5:55inflation story here. And when it comes5:57to the US dollar, how far could we be5:59actually looking at this? Well, if we6:00take a look at this, I'm going to switch6:02over to DXY. If this thing is going to6:04show some follow-through, which again,6:06huge breakaway move today. The dollar6:09looks really, really strong. And if we6:11actually get here on the daily chart,6:12you're looking at another breakout past6:14100, right? All of a sudden, we're back6:16above 100. Huge move higher. I think you6:19have a couple levels to watch that from6:20a technical perspective become really6:22interesting. First of all, you have the6:24prior highs. Watch those carefully6:26because if we get back above those, then6:28then it looks like we're on more of a6:30hiking campaign, which I personally6:32don't think is super likely, but still6:34could be the case. If you get, for6:35example, the jobs data heats up from6:37here as a collective group and economic6:39data starts to heat up and inflation6:41readings come in, you could very well be6:43looking at a dollar that does not want6:44to be tamed. And so in that6:47circumstance, you know, any sort of6:48pullbacks, if we get some of that data6:50to confirm this thesis, I could very6:51well see myself actually getting long6:53the DXY as things are shaping up more6:56bullish here all of a sudden, right?6:58Dollar price action looks really solid.6:59So if we're looking at Euro dollar,7:01which was a bearish idea that we had a7:03few days ago, look at this. It didn't7:04quite pull back to our level, but broke7:06down and has kept going here. Euro7:08dollar down sharply. Pound dollar, look7:10at pound dollar here, sharply lower7:12today following this pullback, which7:15turned into much more than just a7:16pullback. We actually rejected overall7:18the highs here and very well could see7:21pound dollar make some kind of a7:23continuation move uh to the downside7:25more broadly speaking. If I take a look7:27at my top setups reading here, let's7:28just see what is populating currently.7:31At least on the currency front, you have7:33Euro dollar as a bearish reading, Kiwi7:35dollar as a bearish reading, and dollar7:37yen as a very bearish reading overall.7:39By the way, really quick, if you are7:41looking to get funded, then check out7:42today's video sponsor, Ola Prime. I'll7:44leave a link down below in the7:45description, but they are currently7:46offering 20% off with our promo code A17:49trading. All of the information can be7:51found in the description. They offer7:52some very uh competitive pricing, some7:55of the best pricing in the industry, by7:56the way. Um they have futures, forex,7:58all sorts of different things. So8:00explore their challenges if this is8:01something that you're interested in8:02finding out more. Of course, go through8:04all the different details, make sure8:05it's a good fit for you, your trading8:06style, etc. And uh with that said, thank8:09you again to Ola Prime for sponsoring.8:11So, let's talk a little bit more about8:12this precious metals idea that I've had,8:14this bullish thesis, this bullish idea8:16that I've had on gold here recently,8:18which has clearly not really played out8:21very well. I've been trading for a8:23really long time. There are times where8:24I am very on the money and really right8:26about things and there are other times8:28where I'm just wrong. And you know a lot8:30of times especially when you get into8:32trading first and foremost I remember8:34being new to the stuff and thinking wow8:35so and so is very knowledgeable when I8:38listen to them they know their stuff and8:39if they're bullish on something I want8:41to be bullish too because it makes sense8:42right they're they sound quite smart on8:45this stuff and I just want to say it is8:47easier to sound smart in trading than to8:50be right all the time. Now, why am I8:52telling you this? If I'm, you know,8:54operating a YouTube channel here, I sell8:56a product. Why would I tell you this8:57stuff? Well, it's because the reality of8:59profitable trading has nothing to do9:01with how often someone is actually9:02right. I am wrong like any other trader9:05is at times. And what's important here9:07is that when you are wrong in trading,9:10what happens to your account? What9:12happens to your performance? Do you get9:14absolutely devastated when your account9:17hits a stop-loss, or is it just another9:19trade in the bucket? you're on to the9:21next idea and you're able to keep an9:22open mind and adapt your thinking. Now,9:25again, my thesis with gold here, which9:27started out really well, has sort of9:29fizzled away. We've seen yields continue9:31to move higher. Some data has started to9:33contradict my perspective. And so, if9:36price breaks lower from here, there's9:38going to be no question. It's time to9:39exit the position and rethink what I9:41want to do with gold. And I'll tell you9:43right now, at least right now, there's9:44no reason for me to jump back in9:46immediately to a gold long trade. And9:48I'm telling you this because again I9:50think a lot of traders on the internet9:52they won't show you and I understand why9:54you get absolutely you'll probably see9:56it down below in the comment section of9:58this video when people have bad ideas or10:00ideas that go wrong on them even if10:02they're in accordance with a trading10:04system that is profitable overall.10:06People obviously will be like haha told10:08you so is so obvious right and it's not10:10never actually that obvious. Trading is10:12far more difficult than uh new people10:15would like to believe it is. But the10:17reality is, you know, if you have an10:19idea that goes wrong, that doesn't make10:21you a bad trader. What makes you a bad10:23trader is lacking a system, lacking risk10:26management, and getting absolutely10:28destroyed when you're wrong or believing10:29that you're a genius when you're right.10:31At the end of the day, being right or10:33wrong on any particular move is should10:35just be another another trade in the10:37record book. Again, the ability to10:40predict this stuff is overvalued in my10:44mind as opposed to sticking to a system10:46that long-term has an edge is10:48undervalued. People focus so much on I10:50know what gold's going to do this10:52morning and they focus less on just10:53simply sticking to a system that10:55long-term should produce more profits10:57than losses. So, I just want to leave10:58you with that message because I'm not11:00shying away in any way to this idea that11:01I've had on gold, which I thought it11:03would move higher and it has not. And11:05so, what am I doing about it? Well, if11:07price breaks this 61.8% from here, it's11:10time to exit the position, move on to11:12the next idea. And here's what I was11:14going to show you with this this page11:15here. Gold has moved decisively more11:17neutral. It was bullish in July and in11:19August, but has really moved back into11:21neutral camp. So, I'm just going to let11:23this play out. If it if it does rebound11:24here and move sharply higher than keeps11:26me in the trade, then I'll re uh decide11:29what I want to do with it. But, I'm not11:30bearish on gold either. I'm just really11:32smack dab in the middle. just neutral11:34quite literally here with my meter here11:36showing me that sentiment is positive11:38meaning crowd sentiment's super bearish11:40and institutions are really long but at11:43the same time technicals and macro are11:46giving me some conflicting views notably11:48on the macro side we have a mixed bag11:51here inflation is redot we have a rising11:532-year yield that is a challenge here in11:56the short term to gold and meanwhile11:58economic growth is neutral and the jobs12:01market data is actually leaning a little12:03bit more bullish So you have some12:04conflicting views or conflicting data on12:06the macro side. So by the way, if you12:09want to try out the tool that I'm using12:10here to scan markets, I'm showing you12:12this in transparency. Nothing is right12:14all the time. Nothing is a magic12:16indicator. But if you're trying to12:18implement macro and keep a level head12:20and actually have a system in your12:22trading regardless of the outcome of any12:24single trade, having a thematic way to12:28map out this stuff and keep an eye on12:29macro and find trades that may have12:31stronger conviction or not like this12:34dollar starting to shape up for more of12:35a bullish setup in my view. So keep that12:38with an open mind. But anyways, if you12:39want to try out this tool, I'll leave a12:41link in the description down below to12:42where you can sign up for a free trial,12:44get some information about the tool, and12:45see if it's a good fit for your trading.12:47Thank you very much for watching and12:48we'll see you in the next
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