Macro Must-See Chart: Will This Gold Sell-Off Be Shorter Than in 2016? (2024/11/12)
The current gold sell-off may last shorter than in 2016. Analysts point out that despite the pessimistic sentiment in the crude oil market, actual global oil inventories have decreased by 71 million barrels. Yardeni Research has raised its year-end target for the S&P 500 to 6,100 points, expecting a growth of 66.6% over the next five years. The U.S. dollar index futures are at a critical point, potentially breaking through or retreating. After the election, the price trends of the euro, Mexican peso, yen, and renminbi compared to 2016 show that the Mexican peso has more room to decline
Oil Market Fundamentals vs Institutional Expectations
Analyst: In the context of pessimism surrounding the crude oil market and multiple institutions updating their forecasts this week, let's review: many bearish predictions this year have not materialized. The IEA had predicted a supply surplus of about 1.6 million barrels per day this year. What is the reality? Global oil inventories have actually decreased by 71 million barrels.
Upgraded Expectations for U.S. Stocks
Yardeni Research: We are raising our year-end target for the S&P 500 index as follows: 6,100 points for 2024, 7,000 points for 2025, and 8,000 points for 2026. Our new target is to reach 10,000 points by the end of this decade, which means a 66.6% increase from the current level of 6,000 points over the next five years.
The Dollar Index at a Crossroads
Analyst: The dollar index futures have returned to the upper boundary of a 1.5-year wedge pattern. This is a critical point, either a breakout or a pullback.
Elections vs Foreign Exchange
Analyst: The chart below shows the price trends of the Euro (top left), Mexican Peso (top right), Japanese Yen (bottom left), and Renminbi (bottom right) since last week's U.S. elections (in blue), compared to the same period in 2016 (in black). The Mexican Peso is the biggest anomaly, and it has significant room for further decline.
The Bottom of Gold
Analyst: After Trump won the election in early November 2016, gold prices fell sharply for several weeks until mid-December (refer to the leftmost part of the chart). Subsequently, gold experienced a significant upward trend in 2017.
It is reported that Western speculators (leveraged hedge funds and commodity futures traders) are attempting to replicate the sell-off seen at the end of 2016, aggressively closing long gold futures positions and actively shorting. However, given that Eastern buyers are stepping in (potentially providing price support again), and the magnitude of this decline is considerable, my intuition is that the duration of this sell-off...
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