Stronger Dollar Brakes Gold

The Market Gage - Dillon Gage's Precious Metals Newsletter

The price of gold under pressure this morning due to a stronger dollar. The dollar index hitting 97.32 this morning, the highest level since March. A continued rally in the equity markets also pressuring the price of gold.

Recent strong job numbers and June housing data (reported up 4.8 percent) gives the Fed a strong case for raising rates at the next Fed meeting.

Scheduled European Central Bank meeting tomorrow and the expectation is that they will leave their policy unchanged.

Some Wall Street Gold traders this morning indicated that they expect gold to test the $ 1,300 dollar level. One trader also shared, in his opinion, that in the event the Fed comes in and raises rates at the next Fed meeting, the bull market will cease to exist and the $1,300 dollar level will become a distant memory.

I can’t disagree. A rate hike is the last thing people holding a long position in gold want to see. Nonetheless, we still see inflows in the ETFs. Overnight, all four metals increased their positions. This is becoming a very interesting market. If the economic data continues to be upbeat, the longs will have a tough time holding on to their positions and I expect a strong
move to the downside in the price of gold will be in order.

Have a wonderful Wednesday.

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.