The price of Gold getting help from weaker U.S. Treasury yields and a declining Dollar index.
The yield on U.S. 10-year Treasuries was weaker overnight as it was recently quoted at 2.5840 percent down from 2.6183 percent on Friday. The yields on the U.S. 2-year and 5-year treasuries remain inverted and the German 10-year Bund yield still paying peanuts at 0.0900 percent compared to the U.S. 10-Year Treasury bond.
The Market is very interested to hear what the Fed Chairman has to say at his news conference on Wednesday after the 2 pm interest rate decision.
The market doesn’t expect a rate hike at this meeting. The question is, do they share their intentions regarding the balance sheet? Their decision to pause is one thing, but we cannot forget they are still in a tightening stance because 50 billion is coming off the balance sheet every month. This will continue until they say otherwise so we are looking for some clarity in that regard.
The markets like the economy are dependent on continued access to cheap credit, as we saw in the fourth quarter what happens when credit starts to recede.
Currently the price of Gold is consolidating at these levels and as long as we stay above the spot technical support level at $1,304 higher prices are possible, but it’s a very thin line at the moment.
Palladium
Palladium continues to enjoy strong fundamentals and attract new investors into the marketplace. But as one Wall Street PGM trader said to me this morning, “In a thin market like this, investors with long positions in the Palladium market would be a wise to make sure their stop loss limit orders are in place, because you never know with a news story can emerge and take a market like this down significantly. In the meantime, enjoy the ride.”
The Week Ahead
We’ve got a busy week ahead of us with lots of economic data on the way.
Monday
- The release of the monthly survey of NAHB members designed to take the pulse of the single-family housing market.
Tuesday
- Day one of the March FOMC meeting
- February housing starts
- Factory orders
Wednesday
- FOMC decision regarding interest rates
- Fed Chairman Jerome Powell’s new conference.
Thursday
- Initial Jobless Claims
- Philadelphia FED Manufacturing report
Friday
- February existing home sales.
As you can see there will be a lot of information released this week that will potentially influence the markets.
Have a wonderful Monday.
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.