The price of Gold today is under significant pressure as rebounding Equity markets and a stronger dollar is forcing some long holders to head for the exit.
Yesterday, the Dollar Index broke thru the 97 level and established a 16-month high. Not helping matters is the continued rally in equities, up triple digits today before the opening, after showing a 450 pt. advance yesterday.
From this juncture we need a lower Dollar AND lower equity prices for Gold to recover.
If this pattern continues, we will be testing the $1,210 spot support level once again. Some Wall Street traders told me this morning they got out yesterday as soon as the Dollar made a new high and way before the 100-day moving average of $1,219.98 level was violated.
Also, former Fed Chairwomen Janet Yellen’s comments are not helping our cause. Here are some of her comments this morning:
“A couple of more rate hikes are necessary.”
“I’m worried we’re headed for an overheated economy.”
“I do not see inflation building rapidly.”
“I’m worried about the tariff impact on investment spending.”
“Our national debt is on an unsustainable path.”
One economist I spoke to this morning said, “There seems to be no stopping the gains in the U.S. Dollar, even an unexpected result in the midterm elections shouldn’t derail it at this time.”
My thoughts differ. Recently the wild volatility in the Equity markets only brought more uncertainties and the one thing investors don’t like is uncertainties. Just this past Monday, Equities had a 900-point swing. If that’s not an indication of confusion nothing is.
So I don’t expect the rug to be pulled out from the Gold price. This pullback only gives the investors a better chance to continue their dollar cost averaging plan.
I still think there are still significant geopolitical risks in the market place, the trade war with China, our debt, ignored costs of entitlements, healthcare and infrastructure to be addressed, before I give up with an investment in Gold.
If we can solve all these problems, I’ll stay quiet. Until then I’ll stick with my Dollar cost averaging strategy for a long term investment in the Gold market.
Have a wonderful Wednesday.
Disclaimer: This editorial has been prepared by Walter Pehowich of Dillon Gage Metals for information and thought-provoking purposes only and does not purport to predict or forecast actual results. This editorial opinion is not to be construed as investment advice or as a recommendation regarding any particular security, commodity or course of action. Opinions expressed herein cannot be attributable to Dillon Gage. Reasonable people may disagree about the events discussed or opinions expressed herein. In the event any of the assumptions used herein do not come to fruition, results are likely to vary substantially. It is not a solicitation or advice to make any exchange in commodities, securities or other financial instruments. 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. 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.