French Election Results Ding Gold

The Market Gage - Dillon Gage's Precious Metals Newsletter

Le Pen’s second place finish hurts the price of gold.

As soon as it was obvious that Le Pen was not going to win the first round of the French Presidential election, the price of gold took it on the chin. In the early evening here in the states, the CME Gold futures contract traded down $23.00 to an intraday low of $1,266.00.

Le Pen finished in second place behind a former investment banker and political novice Mr. Macron. This is a very untraditional outcome, as neither candidate came from the establishment parties that have been in power for decades.

Nonetheless, a second place finish gets her into a runoff in two weeks to see who will be the next President of France. According to the polls and the way the equity markets are reading the tea leaves this morning they are not giving her much of a chance of defeating Mr. Macron.

So now it looks like the European Community will stay together and just have to deal with the UK leaving. We will have to wait to see what the financial impact will be as the process develops.

This election was so much a part of the recent rally in the price of gold that even with the lower dollar this morning, gold seems to be in an offer mode down $17 dollars at the time of this report. I do expect the price to recover somewhat but for now the rally has lost all its momentum.

Back to our shores, U.S. news events that can impact the markets this week:

Will both parties come to an agreement later this week to fund the Government, or will the Democrats play hardball with the president? Healthcare seems to have zero impact on any market and everyone’s awaiting the big announcement on Wednesday promised by the President with his plan for tax cuts both corporate and individual. Equities around the globe are up nicely this morning and the Dow is up over 200 points on the opening. So one could expect the equities to get all the coverage this week unless some unexpected news hits the wires.

The next level of support in the gold is at $1,248.00 and silver at $17.52.

Have a wonderful Monday.

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.