Election Results Soften Dollar

Election Results Soften Dollar

The Blue wave hit the shore yesterday and reached the House, but didn’t go far enough inland to reach the Senate.

The Democrats now control the House of Representatives and vow to disrupt the President’s economic agenda.

Equity markets seem not to care as many investors see the same congressional gridlock that occurred when both houses were under Republican control.

So at this point, corporate earnings are now front and center on investors’ minds.

Due to the midterm elections, the two-day Federal Reserve meetings begin today. No change in the Fed Rate is expected in the November meeting, but investors and traders will be listening to hear if there are any changes in 2019 rate hike predictions.

The Election results have weakened the U.S. Dollar a bit overnight. Additionally, Treasury yields are on the decline, S&P futures and global stock prices are higher, and emerging market and world currencies are also higher today.

The lower U.S. Dollar helping the price of Gold head higher this morning, now at a two week low, and the price of Gold is now trading in the higher end of the most recent trading range. Currently it is difficult to find a catalyst that would propel the spot price of Gold to the next major level of resistance at $ the $1,239 – $1,240 area.

So we look for a lower US Dollar and weaker Equity prices for assistance, but at this juncture at the opening of the Equity markets we see strong gains there, so it should limit our chances for higher Gold prices today.

Let me add this thought. In the near term, if the Democrats are successful in derailing the President’s economic agenda, I expect the Dollar to weaken and the price of Gold to benefit from such actions. That keeps my strategy of using a dollar cost averaging approach to entering the Physical Precious Metals market intact. And a way of creating true balanced portfolio.

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.