Gold In Positive Territory

Gold In Positive Territory

This morning, a weaker Dollar Index is keeping the price of Gold in positive territory.

Earlier in the week, Wall Street Gold Traders holding on to long positions were hoping to find buy stops above the $1,200 dollar level and when it didn’t materialize quickly reversed course and covered their positions.

Almost at the same time, the U.S. Dollar found its stride once again against emerging markets’ currencies and bounced off its lows, putting a torpedo into the side of the yellow metal’s price.

So we seem to be back at square one, hoping to hold the $1,185 area, which was the resistance level earlier in the week and has now become the new support level.

Today, Fed Chairman Jerome Powell will address the Central Bankers at 10 am Eastern Daylight Time (EDT) at their annual meeting in Jackson Hole, Wyoming. It should be interesting to hear what the Chairman has to say, as he must be feeling pressure from the President’s comments that Powell should not disrupt the strong economy by continuing to raise rates.

I’m sure the Chairman believes that the strong U.S. economy is exactly the reason he has to raise rates to keep it from overheating, but at the same time he must be concerned about the talk of a trade with war with China. I think he must take a cautious approach in continuing to raise rates in the coming year.

It looks like the market also seems to be cautious as there is not one Fed meeting next year that has odds of a rate hike of over 50 percent, according to the CME Fed Watch Tool.

Not that I give the Atlanta Fed any credibility, because they are constantly changing their predictions, but they are estimating that real GDP growth is running at 4.3 percent for the third quarter, as wage pressures continue to rise. Also they say inflation is on target and unemployment is below 4 percent, so if these numbers pan out, Jerome Powell needs to continue his aggressive posture in raising rates into 2019 as many economists believe a 3 to 3.5 percent Fed fund rate is where we ought to be with this strong economy.

Adding to the support from Chairman Powell’s position is a new record level for the S&P 500, plus a further injection of fiscal stimulus in the second half. He can claim that there conditions justify the further tightening of policy at a steady clip.

So at 10 am EDT today, traders and investors will be watching the business news channels to see if there will be anything he might say that will move the markets unexpectedly. I expect he will not surprise anyone as he is fully aware the power he has to move the market in a big way.

We’ll be watching and report to you in a “Flash Gage” if he says anything that
will cause a move in the price of Gold. In the meantime…

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.