The price of gold under some pressure this morning as both the dollar and Ten-Year Treasury yields are seen in positive territory. Recent previous declines in both markets have been giving the price of gold a boost, but today’s reversal just seems to be a pause in the action as we expect the decline in the dollar and softer Ten
Year Treasury yields to continue.
As such, I expect the price of gold will continue to head higher, as a two-step forward, one-step back improvement in the price. I believe the next level of resistance is the $1,295 range. If we can trade through that level, I expect an obvious speed bump at the $1,300 dollar level. Following this scenario, I expect no resistance until the previous high, back on election night (Nov. 8) last year is reached at the $1,338 level.
ETF gold funds continue to see inflows into their programs, and the CME Fed Watch Tool is at a high chance of an expected rate increase at the next Fed meeting next week standing at a 93.5 percent.
Across the pond
Tomorrow the UK holds its 2017 general election for a new government. On April 18th, Prime Minister Theresa May called for a snap election on June 8th. At that point, she was expecting to take advantage of her opponent’s weakness in hopes of obtaining a larger majority for her party to better negotiate the UK’s exit from the European Union.
But now everything seems to have backfired on her, as the polls predict that the Prime Minister’s plan might be in trouble. Since she called for a snap election she has slipped in the polls almost 18 percent and now leads in some polls by only 1 percent. She has been criticized for not having adequate policing after austerity and policy cuts. With nearly two trillion in debt and repeat terrorist attacks, many are calling for a change.
By the way, the snap election was approved by parliament 522 to 13.
Right after the election there is expected to be an arm wrestle of negotiations between the UK and continental European Leaders on the steps to their first level of talks on the UK’s exit. Talks are expected to start the week of June 19th.
No doubt the terrorist attacks will have an effect on how the people vote. So tomorrow we wait to see how this pans out.
Back to our shores
All eyes tomorrow will focus on former FBI Director Jim Comey’s testimony. Mr. Comey is scheduled to testify before the Senate Intelligence Committee and all the major TV networks are planning to air it live.
Obviously, if any bombshells come out of the Comey testimony that effects the equity markets, one could expect possible fireworks in the Gold market. We should be watching with one eye on the testimony and the other on market reaction.
Have a wonderful Wednesday.
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