Fed Chairwomen Janet Yellen is back on the hill today for her second day of testimony. She’s taking a hawkish stance on future rate hikes and putting pressure on the price of gold this morning. It seems that the future track of the price of gold is in her hands. Yesterday she indicated that it would be unwise to wait too long before raising rates. The possibility of multiple rate hikes this year is driving the dollar higher which in turn hurting the price of gold.
Some Wall Street Gold traders I spoke with are indicating that “IF” the 100-day moving average at $1,214.25 (spot) is violated they will reverse their long position and play this market from the short side. I expect if that happens, the selling will accelerate the decline in the price as we head back and test the $1,200 dollar level again.
BUT one can’t give up on gold yet. Yes, we are feeling the pressure and are extremely vulnerable to any negative news, but the price of gold has held up pretty well even with the equity markets and the S&P setting new all-time highs almost every day. Also the inflows by commodity funds into the Gold ETFs has helped the price from trading lower. What do they know that we don’t?
We have all heard the saying “talk is cheap,” well I’m still waiting for a tax plan that everyone will be extremely happy with, a wonderful the new Health Care Program and the data on how well the economy is doing. But until then we need to clear out all the “smoke and mirrors” and put your money where your mouth is, because if this doesn’t materialize sometime soon, the Trump honeymoon rally in equities will run out of gas and a significant correction will be right around the corner.
And yes even with the price of gold just hanging around taking slaps to the face each day, it will once again be the safe haven investment to turn to.
You could say I’m a little impatient. How about you? My wife says I watch too much business news and it’s effecting my thinking. Maybe so, but I’m addicted. I’m like a soap opera junkie. I just can’t help myself. That’s why a short vacation is in order. I will be back in the office on Wednesday next week. Until then.
All the best and have a wonderful Wednesday.
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