Level Heads Prevail in Precious Metals Market

The Market Gage - Dillon Gage's Precious Metals Newsletter

Level heads prevail as the market absorbs the news released this week from the FOMC.

At the time of this report both gold and silver are trading above the next critical support levels at $1,132 in the February futures contract and $ 16.06 in the March futures contract.

I’m told by my technical buddies that they expect these levels to be tested sometime today. A close eye needs to be on the activity in the dollar index as gold seems to react to any movement in the dollar. In the event these levels are violated today technically, the next level of support in gold is not till $1,118 in the February contract and $ 15.68 in March Silver futures contract.

Helping Gold and Silver stabilize this morning is a slightly weaker dollar and treasury yields off their previous highs of the week. Not helping anyone, is the spike up in mortgage rates seen in the last few weeks.

All four precious metal ETFs saw redemptions yesterday with gold losing 237,000 ounces and silver losing 2.3 million ounces out of the funds.

Some Wall Street traders I spoke with this morning are very content to be playing the gold market from the short side as one guy put it, “I think we have a long way to go. I expect in the near future you will see the Euro at par with the dollar which in turn will bring gold near the $1,000 level.” I sure hope he is wrong. On the other hand the more common sense trade in my opinion, would be waiting to see the economic data released in the first quarter 2017. Also seeing as how welcome Trump’s first 100-day economic policies are received by both houses. I’m sure the honeymoon won’t last too long between Trump and the mainstay Republicans and Democrats.

Some Financial advisors tell me their clients will be focusing on the Dow 20,000 level if reached and will be ready to take some profits off the table in the event there is no immediate follow thru to higher levels.

It’s always my attempt to bring to you as many opinions from as many diverse players in the Wall Street arena as I can in order for you to have a complete picture of how the street thinks and trades.

Have a wonderful Friday.

Disclaimer: This editorial has been prepared by Walter Pehowich of Dillon Gage Metals. This document is for information and thought-provoking purposes only and does not purport to predict or forecast actual results. It is not, and should not be regarded as investment advice or as a recommendation regarding any particular security, commodity or course of action. Opinions expressed herein are current opinions as of the date appearing in this editorial only and are subject to change without notice and cannot be attributable to Dillon Gage. Reasonable people may disagree about the opinions expressed herein. In the event any of the assumptions used herein do not come to fruition, results are likely to vary substantially. All investments entail risks. There is no guarantee that investment strategies will achieve the desired results under all market conditions and each investor should evaluate its ability to invest for a long term especially during periods of a market downturn. 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. This information is provided with the understanding that with respect to the opinions provided herein, that you will make your own independent decision with respect to any course of action in connection herewith and as to whether such course of action is appropriate or proper based on your own judgment, and that you are capable of understanding and assessing the merits of a course of action. You may not rely on the statements contained herein. Dillon Gage Metals shall not have any liability for any damages of any kind whatsoever relating to this editorial. You should consult your advisors with respect to these areas. By posting this editorial, you acknowledge, understand and accept this disclaimer.