Dollar Weakens – Gold On Solid Footing

The Market Gage - Dillon Gage's Precious Metals Newsletter

All eyes on the Federal Reserve today ahead of the conclusion of its two day meeting. A decision on interest rates and Balance sheet reduction to be released today at 2 pm eastern time.

The Chairwoman will be speaking right after the news is released. We don’t expect any increase in interest rates at this meeting, but we do expect some clarity in their steps to reduce the balance sheet.

Today’s Market Insights

The price of gold is on solid footing for the time being as the dollar and Treasury yields show some weakness.

The British Pound overnight showing strength vs. the US dollar as retail sales there were much better than expected. The Euro also showing strength against the U.S. dollar, trading slightly above the 1.20 level in overnight trading.

Levels of support in Gold is seen at the $1,306 spot level. Spot Silver must hold $ 17.02 level otherwise we expect stops to be triggered just below that level accelerating a selloff.

Across The Pond

Sunday’s German Election

According to the opinion polls, Chancellor Angela Merkel is enjoying a comfortable lead coming into the General Election on Sunday. Her conservative group is set to control the German Government, but
it looks like she will have to obtain one coalition partner to guarantee a parliamentary majority. It’s imperative that she controls the majority with such issues to be addressed as the “Eurozone reform plan” and “Fiscal rectitude” in the European Union.

Another issue she will have to work on is the widening gap in Germany between the rich and poor. Many less fortunate working Germans claim they can survive, but not live or enjoy life with the limited resources (mainly wages) that are offered for their services.

Germany has the highest income per person and the lowest unemployment rate in the EU community, but there are many asking for more social equality in the country as the difference in life styles of the rich and poor continue to widen.


For those familiar with Kinross, a Toronto-based miner, at one point on Monday, their stock dropped almost seven percent after the company released news that they are expanding their operations in Mauritania West Africa at a cost of over 590 million dollars.

They also said they plan on expanding construction at their Round Mountain mine in Nevada at a cost of 230 million.

This capital inflow is expected to increase the Mauritania mine’s annual Gold output to 634,000 ounces for the ten-year life project. Their cost of production is expected to be an average of $ 655 dollars per ounce for that period.

Kinross said their capital infusion into the Round Mountain mine project will increase its production life by five years. A Kinross spokesperson said together their investment into the two mines will increase production to 2.5 million ounces per year.

Have a wonderful Wednesday.

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