Strong Euro Zone Buying Keeps Gold Afloat

The Market Gage - Dillon Gage's Precious Metals Newsletter

Gold seems to be holding a key level of support at the $1,158 level in the February futures contact. Technical chart numbers reveal that this level is a must hold otherwise $1,132 is the next stop on this train.

Far East selling overnight put real pressure on the yellow metal, but strong Euro zone physical buying helping Gold stay afloat.

Silver still holding her own around the all-important $ 17.00 level.

All eyes will be on the Fed meeting mid-week, as a .25 basis point rate hike is virtually a done deal. What everyone is waiting for is not so much whether a rate hike will happen, but what the language reveals going forward on future rate hikes. The CME Watch tool shows a 5 percent chance of a rate hike at the next FED meeting in February and a 16 percent chance of a rate hike in March. So for the time being it looks like a one and done for at least the first quarter next year.

Some Financial advisors I spoke with this morning are still seeing a rotation out of metals and into equities. One prominent financial advisor indicated that he believes the equity market will continue its rally for at least another six months. Hard to argue against that statement with the momentum that’s in the market since the election.

In the event that the Fed has little to say on future rate increases gold should get a boost and rally from this very important support level.

A weaker dollar this morning is also keeping gold from heading further south. My only concern at the moment is seeing the 10-year treasury yield trading up this morning at 2.49 percent. Stronger bond yields along with a stronger dollar is bad news for our markets.

Wall Street day traders indicated this morning that algorithms are their tool for trading until the Fed speaks on Wednesday. Until then the very active Oil market is giving them the them best bang for their buck.

Have a wonderful Monday.

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.