Our morning market news finds the price of Gold receiving a boost today at 8:30 Eastern Time, when the GDP report was released. A second quarter result of 2.6 percent and a lower revision on the first quarter number rallied the price of Gold five dollars, just falling short of the next level of resistance in the December Gold futures contract at $1,274.
Also helping the price of gold this morning is a weaker dollar. Currently the dollar index is trading below the 93.50 area, a number that many traders are watching. Traders believe the 93.50 level is a key figure that we need stay below, for the price of Gold to continue its progress to the upside. Yesterday, the dollar index was all over the map trading in almost a big figure range for the day confusing many Gold day traders about where the yellow metal is really headed.
I watch the dollar index every minute of every day to see how the price of gold reacts to its movement, so I must say I can agree whole heartedly with the guys on the street, that currently the 93.50 number in the dollar index is the needle mover. Above 93.50 we trade lower, below 93.50 we rally. For the time being it looks as simple as that.
Sure there are other factors that can come into play, but for now this is the pattern many Gold Traders are watching.
In The News
A story published in Wednesday’s edition of Mining Weekly, points out that in the past four months, Gold prices moved in a 7.6 percent range, the least in ten years, while 120-day volatility is at the lowest since 2005. No wonder the Wall Street Gold Trader has turned to currencies to make a living.
The story goes on to say that Miners have given up hedging future production under pressure from shareholders, concerned that it pushes metals prices lower.
While irritating for Gold traders who make a living betting on strong moves, the sleepy gold market also reflects stability in other assets, with measures of global shares at record highs. Investors from currencies to equities have been boxed in between concerns over a weakening dollar and speculation that central banks will tighten money supply.
The last time the Gold market was experiencing strong volatility was when Britain was threatening to leave the EU where Gold’s 120-day historic volatility hit a two-year high above 18 percent.
Over The Pond
This week’s Greece 3 billion, 5-year Bond sale was a big success. Priced out at 4.625 percent, pleased investors over the pond looking for a better return on their investments versus the 5-year German debt that is still trading at a negative yield. There is no doubt the Greek economy still poses a high risk to investors, but Prime Minister Alexis Tsipras is determined to try to pay off his debt before the EU’s bailout program ends next summer. We all wish him luck, he’s going to need it.
Have a wonderful Friday.
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 advisers with respect to these areas. By posting this editorial, you acknowledge, understand and accept this disclaimer.