Walter Pehowich is on vacation this week. Market Insights are prepared by senior Dillon Gage analyst.
After starting the week strong, several factors combined to pressure gold prices.
The shine was taken off the yellow metal on Monday when Bloomberg reported that Stanford University economist John Taylor could have the inside track on Federal Reserve chairmanship as he had “made a favorable impression on President Donald Trump” last week. Why would this hit gold? Bloomberg says Taylor is “the namesake of a well-known monetary policy rule that would generally advocate higher interest rates.”
Then yesterday brought a drop in gold and silver prices, primarily driven by the stock market reaching an all-time high over 23,000, before dipping back under the line at 22,997.44, still a record close. (The Dow is back above 23,000 at this morning’s open.) Couple that with a rising U.S. dollar, and gold retreated from its brief residence above $1,300 per ounce and is currently hovering at $1,280.
China begins their annual Party Congress meetings today, which only happen twice every 10 years. You can bet that economic analysts across the globe will keep a close eye on the proceedings, searching for particular hints on their domestic economic policy initiatives.
The precious metals market continues to speculate on what the Fed may do come December vis-a-vis a rate hike. If the economy doesn’t produce the type of indicators that would merit an increase, expect a solid rebound in the gold market, as the U.S. dollar gets driven down.
North Korean rhetoric continues apace with their latest quote today, “The situation on the Korean peninsula where the attention of the whole world is focused has reached the touch-and-go point and a nuclear war may break out at any moment.” This situation requires near constant monitoring for market activity as this week’s joint naval exercise between the U.S. and South Korea continues and as the U.S. prepares for next week’s noncombatant evacuation drills in South Korea.
Stay safe and have a wonderful Wednesday…
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