Key central bank action from the Fed and the ECB this week saw both committees stay on hold as expected. However, neither offered a dovish pivot to override the bias from our desk for December hikes.
Rather, the meetings this week reinforce our view expressed throughout the autumn of hikes to close out the year, albeit for slightly differing reasons.
Even though some may want to trade the corresponding futures contracts that encompass the December meeting, we find better payoffs in shorting XAU/USD, combining the fundamental “higher rates” view with the technical break below $4,000.