FLASH GAGE – Market Algorithms Respond to Initial Fed News

Flash Gage - News Headlines that Impact precious metals as they happen.

Algorithms kick into high gear as the news on the FED decision hits the wires. Traders rely on these programs to position themselves to be first in line taking on a position as key words are released.

When the news was released that the Federal Reserve was raising the interest rate by .25% for the first time in 2016, we saw the dollar rally and yields on the ten-year going positive bringing the price of gold into negative territory.

Near-term risks are fairly balanced as they predict three rate hikes in 2017. One has to remember that in December last year, some FED presidents called for 5 rate hikes, but we didn’t get another none till today. The sceptics will argue that unless the economic data is compelling a rate hike is not in the cards first half of next year.

With treasury yields above 2.5 percent and a stronger dollar, one would have to believe the possibility of future rate hikes are in the cards giving gold the sell bias we see after the number. Maybe the market will settle down after the chairwoman gives her statement to the press. As I always say, I’ll wait for the market to absorb the news before taking a position.

Enjoy the rest of your day.

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.

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