Gold Hanging Tough As World Awaits Fed’s Rate Decision

The Market Gage - Dillon Gage's Precious Metals Newsletter

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

Until then…
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.