Surprisingly, even with a stronger U.S. Dollar and rallying Bond prices across the globe, the price of Gold is holding up well.
I believe the catalyst was, and will continue to be, the dovish stance taken by the Federal Reserve board. It’s very unusual for a Fed Chairman to give guidance out 18 months expressing the view that he sees no rate hike this year and only one next year.
The Chairman did indicate he will be watching very closely the Brexit outcome and China negotiations which could lead to a change in Fed policy if things on either of those two fronts gets out of hand.
The Fed’s mandate concentrates on inflation and job growth. Inflation is just under their target rate and there are many employers looking for candidates to fill their open positions.
Currently, with a strong economy, there doesn’t seem much for the Fed to do. We all know the first quarter GDP will show a soft number, because of the Government shut down and declining retail sales, so the question becomes what will we see in the second quarter?
Will retail sales continue to decline and will the second quarter GDP number be less than stellar? Only time will tell.
In the meantime, the price of Gold continues to ignore the headwinds of a stronger dollar and high Bond prices.
Technical levels haven’t changed. Today and in the days to come, traders will still be watching to see if the price of Gold can maintain and hold above the $1,304 level. Right now, it looks very encouraging.
Have a wonderful Friday.
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.