Gold and News Headlines

The Market Gage - Dillon Gage's Precious Metals Newsletter

Federal Reserve Bank of Atlanta President Dennis Lockhart said yesterday that the U. S. Financial markets may be underestimating the odds of a central bank rate increase in June. Investors currently predict the FED will raise rates only once this year, and see only a 13 percent chance of a hike in June, according to an analysis of Fed fund futures by the CME Exchange. By the way, currently Dennis Lockhart is not a voting member.

Right after the Fed meeting in June comes the vote on whether Britain will leave the European Union in a national referendum. I’m sure the folks at the FED will be watching this closely. Britain is the EU’s second largest economy and no one really knows what the impact will be in the event they turn their backs to the rest of the EU.

This all came about when British Prime Minister David Cameron made an election promise to negotiate a better deal for his country in the EU to unite the left and right in his conservative party. The influx of migrants all over Europe is on all the minds of the British population and will have a direct effect on how that vote goes.

Whether its news over the pond, or in the Far East or here in the states, all the economies are connected. And one must remember that global interest rates and currency valuations have a direct impact on the price of gold.

Case in point. Yesterday the dollar index traded below 92 and hit a low of 91.91 before technical indicators kicked in, indicating the dollar index was oversold. Subsequently, buying came in and propped up the dollar and gold sold off. This morning at the time of this report gold is trading at $1,286.00 and the dollar index has rallied to a high of 93.28 in today’s trading. Nonetheless, even with the price of gold down $3.00 from yesterday’s close, gold continues its bullish tone.

Another bit of news worth sharing is that the holdings in SPDR Gold shares, the world’s largest exchange-traded fund backed by gold, increased by 20.8 metric tons yesterday, the largest one day increase since 2011.

Have a wonderful Wednesday.

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.