Gold/Dollar Seesaw Ride

Gold/Dollar Seesaw Ride

Walter Pehowich is off today.

The Gold/Dollar seesaw ride continues. This morning, the U.S. Dollar index has softened and boosted gold.

Last week saw gold hitting recent highs then selling off as a stronger dollar hit a near 19 month high. Meanwhile, Palladium continues to have the upper hand among precious metals.

As we rapidly head toward the end of 2018, we embark on a week that’s packed with econonomic activity including the Fed’s last meeting of the year AND the final Triple Witching expirations on Friday.

Another rate hike from the Fed is generally expected to come out of Wednesday’s meeting. In fact, the CME Fed Watch tool currently has the odds of a rate hike at just over 78%. The inevitability of this raise is thought to be baked into the markets, so a big reaction is not expected.

The more interesting highlights from the Fed meeting could well be its outlook for 2019, which appears to be sprouting dovish plumage. The International Business Times polled several top analysts about the coming year. Their report, released today, includes these highlights:

  • ING: “Even market participants have grown skeptical about the course of monetary policy in 2019. ING said Fed funds futures contracts suggest the market is no longer fully pricing even one hike in 2019.”
  • Merrion Capital: “The global economic/geopolitical background is turning more negative as the days go by and the Fed is aware of this…The risks for 2019 are tilted to the downside, with the possibility that the US central bank could sit on the fence for the whole year.”

Walter will be back on Wednesday.

Have a wonderful Monday.

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