Gold craters as global rate hikes kick in — short the metal's continued slide
Thesis
You would normally expect gold to go up when inflation rises, but right now it is crashing because interest rates are climbing even faster. When rates go up, gold becomes less attractive to investors since it doesn't pay out any yield compared to safe government bonds. Both Europe's central bank and the U.S. Federal Reserve are expected to keep hiking rates to fight inflation sparked by the Iran war. With the price already at a six-month low, this downward momentum is likely to keep pushing gold lower as borrowing costs rise.
Strategy approach
Build a short strategy for GLD on the daily timeframe. Enter a short position when the price closes below the lower Bollinger Band (20, 2) and the 10-day simple moving average crosses below the 50-day simple moving average. Set a stop-loss at 2% above the entry price, and use a 5% trailing take-profit.