Gold Ticks Up – Awaiting Fed Meeting

Market Gage Gold Market Insights

Lead by the new Fed chairman Jerome Powell, the Federal Reserve is expected to make its first rate increase in 2018, today at 2 PM EST. We anticipate no other changes in Fed policy as the new chairman is expected to follow the former chairwoman’s dovish policies. The Street is still calling for three more rate hikes this year but as in the past the Fed’s decision will be totally data dependent. Higher GDP figures and Inflation rates will be the key to higher rates.

I’ll be very surprised to see no more than two rate hikes this year as I believe their target rates will fall short from higher consumer debt, hitting a new all-time high every time the survey is taken. Currently at over 13 trillion dollars and climbing, higher interest rates will only compound the problem.

The economy will benefit from the tax breaks, but will it be enough to reach the growth the economists and the President are looking for?

Wall Street Gold traders have their algorithm programs locked and loaded just in case any unexpected news hits the wires. The price of Gold is up this morning ahead of the decision from a slightly weaker U.S. Dollar.

Secretary Steve Mnuchin commenting as he attends a Group 20 meeting in Buenos Aires said, “We need to be prepared to act in the U.S.’s interests to defend free and fair reciprocal trade, and in doing that there’s always a risk that if we put tariffs on them other people will reciprocate, and there’s a risk of a trade war.”

A trade war is something the equity market doesn’t want to see. I believe that’s the reason no new highs are being seen in this market, because the President is so unpredictable. A declining stock market along with a weaker dollar is what I expect will be the catalyst for higher gold prices. And as I said before, gold investors need to be patient as our day will come sometime later this year. The reason I’m predicting later in the year is that it will take some time for economic numbers to reveal that the economy is not reaching the growth that everyone had predicted from the corporate and individual tax breaks.

If any unexpected news is revealed at 2 p.m. today, we will immediately send out a “Flash Gage” with all the details.

Have a wonderful Wednesday.

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.