Trade View: Building up gold shorts vs the USD, into the Fed hike
Building up short golds vs. the USD, into the Fed hike. In a trade that worked well for the MM book into the March Fed hike, we are looking to replicate what seems to be a high probability pattern in this hiking cycle so far, i.e. the under-performance of previous metals into Fed meetings where there are hikes.
Management and risk description
Short 1x of NAV, so $10m and looking to potentially build that out to 2-3x over the next 17 days...
Feel the recent break we had on gold taking us south of the $1300, confirmed that in the near term the precious metal may struggle to rise with yields and Fed expectations potentially to the upside.
Key risks of course are the ongoing geopolitical risks in Italy, Spain, Europe, Turkey and of course US/NK. Not to mention a more dovish Fed, poor US inflation print, etc...
NAV trade of 1x, would need to revisit thesis if we get back above $1330
Targeting $1235 / $1250 range, with a time stop around the Jun 13 Fed hike