Well, it turned out exactly as we anticipated. A 90-day pause, before implementing the 25 percent tariff rate hike. The President just couldn’t walk away from that dinner meeting without accomplishing something.
With both country’s negotiators still digging in their heels, a favorable outcome is still in question. This morning, Treasury Secretary Mnuchin said that President Trump and President Xi had a “defining moment.” I’m wondering just what that means?
Are the markets ready for a three-month news bombardment? I expect the media will be scrambling every day to find any news that could affect the markets. The Treasury Secretary said there are hundreds of items that need to be discussed. Knowing how long it takes to get an agreement on just one item between these two nations, I wonder if an agreement is at all possible?
At this point, it’s a just “kick the can down the road moment.”
Nonetheless, at this juncture the Equity Markets across the globe seemed to be pleased with the outcome and are showing strong gains. The Dow Industrial average also is showing healthy gains.
NOW the big question on everyone’s mind is where do we go from here?
On this hopeful news, can Equities go into overdrive and recover? Can the price of Gold trade higher as the talk of an interest rate pause is in the cards, as indicated by Minneapolis Federal Reserve President Neel Kashkari?
Some of the Wall Street Gold Traders I have been conversing with said that their key level to entering the market is $1,232 in spot Gold. We will see if they follow thru and support the market here. We also see the U.S. Dollar softer after the news yesterday. I had expected a significant sell off in the U.S. Dollar Index after the news and that just didn’t materialize.
So for that reason, I DON’T expect the price of Gold to show a sustained rally at this time, something some Wall Street Gold traders are predicting.
For those Wall Street traders to be right, they will need to see a steady decline in the U.S. Dollar. If not, I don’t expect them to hold on to their positions for too long.
For Gold investors, at this moment, the U.S. Dollar is the only item they need to be
Have a wonderful Monday.
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.