Flash Gage – Gold Momentum’s Direction Change

I felt compelled to write some comments this morning after traveling to New York City yesterday for some meetings, while watching the gold market momentum change direction.

Yesterday we could not hold the $1,246 level of support, a level which everyone with a long position was hoping to hold. As soon as we broke thru the $1,250 area selling pressure accelerated, triggering stop loss orders along the way, (everywhere it seemed), between $1,246 and the $1,237 area.

Some of the Wall Street spec traders have now reversed their long positions, previously purchased days before around the $1,240 area, and are now sitting with small short positions looking for the Fed to indicate rate hikes are in the cards.

Overnight, selling out of the Middle East put more pressure on the yellow metal.

For the first time this year we’ve seen outflows in the gold ETFs. With the strong sell off in the price of gold yesterday, some short term investors decided to take some profits off the table and are waiting for lower levels to get back in.

Now all eyes are on tomorrow’s FED decision on rate hikes. The consensus is, a rate hike will not happen before the June Fed meeting. Nonetheless, in an absence of any rate hike tomorrow, we look for the language published after the meeting for an indication going forward to what the Fed policies will be.

Have a wonderful Tuesday.

Disclaimer: This editorial has been prepared by Walter Pehowich of Dillon Gage Metals. This document is for information and thought-provoking purposes only and does not purport to predict or forecast actual results. It is not, and should not be regarded as investment advice or as a recommendation regarding any particular security, commodity or course of action. Opinions expressed herein are current opinions as of the date appearing in this editorial only and are subject to change without notice and cannot be attributable to Dillon Gage. Reasonable people may disagree about the opinions expressed herein. In the event any of the assumptions used herein do not come to fruition, results are likely to vary substantially. All investments entail risks. There is no guarantee that investment strategies will achieve the desired results under all market conditions and each investor should evaluate its ability to invest for a long term especially during periods of a market downturn. 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. This information is provided with the understanding that with respect to the opinions provided herein, that you will make your own independent decision with respect to any course of action in connection herewith and as to whether such course of action is appropriate or proper based on your own judgment, and that you are capable of understanding and assessing the merits of a course of action. You may not rely on the statements contained herein. Dillon Gage Metals shall not have any liability for any damages of any kind whatsoever relating to this editorial. You should consult your advisors with respect to these areas. By posting this editorial, you acknowledge, understand and accept this disclaimer.