Precious metal prices are modestly lower this morning as we await the decision from the FOMC meeting today at 2pm Eastern time.
We expect them to provide further guidance on when they expect to raise rates. Still the odds are very low that a rate hike will happen today or in July and a 30 percent chance in September. I expect the odds might change a bit after hearing what they have to say today.
I still stand my ground, as I did at the beginning of the year, that 2016 will not see a rate hike. Obviously, the first quarter GDP numbers and the most recent jobs numbers take away any chance of a rate hike. It’s still my belief that the reason more than half of the FED presidents wanted a rate hike is to have an ability to cut rates in the event of a global economic crisis. At the current levels, a crisis can only turn rates into negative territory, something we all know is a last resort decision for the Fed.
A threat of a rate hike this year is still on the minds of many Wall Street Gold Traders and until they get clarity from the Fed that a rate hike is out of the question a “STRONG” gold rally is unlikely. ( Unless the UK leaves the EU and that event has the potential to cause a big move in the price of gold)
The Brexit vote is just a week away and you can be certain that the FED will be watching this closely. A report released today gives the “leave” vote a 7 point advantage over the “stay” vote. The issue of immigration is the main topic of concert for most. If they decide to leave the EU it will be done over a two-year negotiation period with the European Union and I expect the terms of the separation will not be amicable.
To simply look at what kind of impact this will have in the remaining 27 countries of the EU, one would just have to see where the economic strength will come from, its just Germany and France. The other 25 nations have their own problems to contend with and they all can’t look for the big two for help. Most EU economists feel the migrant crisis will not have a major impact on the nations’ economies, I for one believe it’s way too early to tell as more and move make the move into Europe.
One last bit of information for my article today is to report that the “ETF BULL” investor continues to dig in and we see the Gold and Silver ETF funds set a new high for in-holdings in 2016.
Have a wonderful Wednesday.
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