The rally in the Gold Market is taking a pause this morning as a stronger dollar emerges.
The Euro and the Pound Sterling are in the red, having difficulty putting a sustained rally against the U.S. Dollar.
The (European Union (EU) came into existence with the idea of free trade zone and creation of giant economy. One currency for all.
Since the creation of the EU, many European countries have had to be bailed out like Greece, Italy, Portugal and Ireland.
And now adding to the problems in the EU, is the stalemate in the Brexit negotiations.
In the past, everyone has looked to Germany, the “most prosperous country” of the EU, but it too is having economic difficulties.
In other words the EU is in a mess.
One has just to look at 10-year bonds across the globe, especially in the EU, (paying virtually peanuts on their yields), to realize that the rest of the world’s economies are not expanding. So why in the world would the U.S. adopt such an aggressive rate policy.
It’s my opinion that the Fed just ignored what the global market is telling them and went forward with raising rates. So in the future, if the economy turns into a recession, they have a larger cushion to cut rates with.
And the possibility of that happening is increasing every day.
This increase in rates, with two more on the table, will only put the middle class in a more precarious position.
The housing market has already started to slow and this additional rate hike will hurt only consumers looking for a home and making it more difficult for them to pay down debt.
The latest Commitment of Traders Report revealed that speculators have accumulated some additional long positions and the holders of short positions have started to head for the exits as the market picks up some steam. So I believe the price of Gold will continue to head higher, but I expect it to trade in a two steps forward, one step back process.
Let us not forget that the driver to higher Gold prices is a weaker dollar, period. So keeping an eye on the Dollar Index activity is a must to follow the price activity in the Gold Market.
Have a wonderful Friday and Merry Christmas to all.
There will not be a Market Gage Newsletter on December 24, 2018. Happy Holidays from our editorial staff!
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.