- Gold[1] and silver prices[2] pulled back during the latter half of Q2 amid Fed taper speculation
- US Dollar[3] strength might reverse and boost precious metals if the FOMC[4] delays tapering
- Substantial further progress on inflation, and full-employment in particular, are focal points
- Download DFX’s 3Q top trading opportunities[5] from our list of free trading guides[6]!
I’ve been racking my brain for the final two weeks of Q2 trying to come up with a top trade idea for the upcoming quarter. This is largely predicated on my lack of conviction for the general direction of markets over the next three months. There is a great deal of uncertainty for outlook in light of new delta covid variants and central bank tightening, and it seems to me that rangebound price action is the most likely scenario for global assets.
That said, I would argue that simply holding cash is a position in and of itself, which may be a prudent tactic for traders and investors during Q3. After all, there is the lingering threat of Fed tapering and potential for the US Dollar to appreciate in value off multi-year lows. Having cash on the sidelines can also provide market participants with the means to exploit future potential opportunities that there is greater conviction for.
We have already seen the USD[7] start to stage a rebound in response to markets positioning for the Fed to start unwinding asset purchases before raising interest rates. In fact, the bond market is pricing in a 25-basis point interest rate hike by 2022 after the latest Fed dot plot signaled two rate hikes by year-end 2023. Correspondingly, interest rate sensitive assets, like gold and silver, have been
