As Dollar Climbs – Gold Lowers

Gold and Silver Market Insights

Traders are waiting to hear from the Fed today as they complete the Fed’s two-day meeting. A rise in rates is NOT expected at this meeting. Going forward, according to the CME Fed Watch Tool, three more hikes are expected in 2018. So traders will just be looking for any language that might give the market a hint on what, if any, new Fed actions are in the cards.

The price of Gold continues to lose ground as the U.S. dollar continues to trade higher. Yesterday, the dollar index broke thru the 200-day moving average at 91.96. A few years back, a move like this would have put significant pressure on the price of Gold. Fortunately or unfortunately depending how you see it, the lack of professional trading in the Gold market gives little chance for a major move to the downside.

Sure we expect stops below the $1,300 dollar level and expect the price of Gold to continue to trade lower, but with only 120,000 professional long positions reported in the Commitment of Traders Report there doesn’t seem to be enough interest to cascade the price of the yellow metal to new lows “quickly.”

Watching the trading activity in the U.S. Dollar is the only way to predict Gold’s next move.

Silver, the poor man’s precious metal, continues to surprise as it’s not attached so much to the activity of the U.S. Dollar. Industrial demand remains steady keeping the price afloat, but without investor demand it will be very difficult to maintain a strong rally .

Our Feature Story:

A report released by the Bureau of Economic Analysis revealed that the core personal consumption
expenditure price index reached its highest level in 17 months.

The index, which excludes food and energy components, jumped 1.9 percent in March after showing a 1.6 percent jump in February and claimed the largest increase since October 2016.

This is good news for the hawks on the Fed board who aggressively want to raise rates 3 more times this year.

Core inflation figures are still below the Fed target rate of 2 percent, but with consumer spending ticking up ( even though most of it’s on credit ) the Fed is getting very close to obtaining the data needed for the next Fed hike.

Wages continue to rise as private sector payrolls increased by 2.9 percent in the first quarter this year.

As I’ve said before, no one expects a rate hike today. The odds indicate the next rate hike will be at the June 13 meeting.

We will be monitoring the Fed announcement at 2 pm EST today and if any unexpected news is released we will get it right out to you with a “Flash Gage”.

Have a wonderful Wednesday.

Disclaimer: This editorial has been prepared by Walter Pehowich of Dillon Gage Metals for information and thought-provoking purposes only and does not purport to predict or forecast actual results. This editorial opinion is not to be construed as investment advice or as a recommendation regarding any particular security, commodity or course of action. Opinions expressed herein cannot be attributable to Dillon Gage. Reasonable people may disagree about the events discussed or opinions expressed herein. In the event any of the assumptions used herein do not come to fruition, results are likely to vary substantially. It is not a solicitation or advice to make any exchange in commodities, securities or other financial instruments. No part of this editorial may be reproduced in any manner, in whole or in part, without the prior written permission of Dillon Gage Metals. Dillon Gage Metals shall not have any liability for any damages of any kind whatsoever relating to this editorial. You should consult your advisers with respect to these areas. By posting this editorial, you acknowledge, understand and accept this disclaimer.