We saw a quick move up and then a huge move lower – particularly in mining stocks.
By the way, do you recall how we bought that 2020 bottom about 30 minutes within it?
So, no, the rate cut does NOT have to result in a rally in gold, silver or mining stocks – it might have no implications, or it could result in declines.
To clarify – I’m not saying that gold “has to” decline on rate cut or that it’s certain that it will decline after a cut. This might happen. What I’m saying and emphasizing is that this does not have to happen – and that declines after the cut is more likely than rallies – especially when one takes the current expectations into account.
Besides, gold, silver and mining stocks have been likely to decline based on other reasons and that’s what they are doing right now.
In yesterday’s Gold Trading Alert, I wrote the following:
“The strength of the bearish implications of the weekly reversal in gold that I wrote about previously is (on its own) multiple times greater than any possible bullish implications that this daily rally might have. And gold’s weekly reversal is not the only factor pointing to lower gold prices in the coming weeks. So, all in all, nothing really changed for gold, and today’s rally is likely meaningless.”
The rally was invalidated, and the overall price action that we saw yesterday was NOT meaningless, and the results can already be seen.
Namely, due to yesterday’s intraday reversal, the very short-term outlook deteriorated, and gold already plunged in the overnight markets.
