Gold trading in positive territory this morning as the world awaits the Fed decision on interest rates at 2pm EST today.
The price of gold holding above the key level of support I‘ve been referring to at $1,158 in the February CME Futures contract. Helping gold hold its position this morning is a weaker dollar index trading below the 101 level and 10-year treasury yields down to 2.43 percent.
On the other side of the ledger, the Gold ETFs continue their redemptions for almost a month now putting continued selling pressure on the price of gold.
The question all Wall Street Gold traders are asking this morning is, will we see a repeat of last December when the Fed last raised interest rates 25 pts…AND talked about more hikes to come in 2016 which in the end NEVER materialized? We all know their famous line, “All future rate hikes will be data dependent.”
Great, that gave us a CLEAR picture of future rate hikes. How about telling us you have no idea what will happen in 2017
and leave it at that. I think the market would appreciate an honest answer.
Let’s look at next year’s odds of a rate hike using the CME FED Watch tool. The chances a rate hike at the next FED meeting in February is only at 4 percent. The March level is reported at a 15 percent chance of a rate increase and the next meeting in May is showing only a 24 percent chance.
That’s why I believe even with all the negative news of late hitting the Gold market, future rate hikes continue to be in question and in turn the price of gold has been able to hold her ground. IF, the language from the Fed today gives us the impression it’s “one and done” as the CME Watch tool indicates, Gold SHOULD see a healthy bounce upward. Once again, the devil is in the details.
At 2pm I will be deciphering the Fed statement and will be sending out a FLASH GAGE with my comments on what was said, so watch Twitter.com/DillonGage.
Until then…
Have a wonderful Wednesday.
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