Weakened Dollar Puts Gold In Positive Territory

The Market Gage - Dillon Gage's Precious Metals Newsletter

As the dollar continues to weaken this morning, the price of gold is seen in positive territory, sitting at the higher end of the most recent trading range. A triple top in the gold chart right above the $1,270 level is the next hurtle for the price of gold to surpass.

I believe the market has taken into account that they will raise rates 25 basis points at the next Fed meeting to be held on June 13th-14th. Federal Reserve Governor Lael Brainaed said Tuesday that a rate hike is “likely appropriate soon,” but slowing inflation could change that. Also joining the ranks of speaking between Fed meetings was Dallas Fed President Robert Kaplan who said he does not think the economy is about to take off. According to the CME FED Watch Tool, December which had shown some strength for the next anticipated rate hike is now below 50 percent. The most recent numbers on inflation released yesterday show core inflation at just 1.5 percent, well below the 2 percent target rate that the FED is looking for. So once again the Fed has a way OUT whichever path they choose, as they can now justify raising rates or holding off.

Greece in the news again

Greece Finance Minister Euclid Tsakalotos warned Brussels that a Greek recovery will not happen if they block a debt deal at the next meeting of the Euro Finance Ministers. Tsakalotos said, “It is incumbent on all sides to find a solution. Currently Greece has over 7.5 billion Euro debt repayments due in July and unless we get some help we will default on our obligations and plunge Greece into a deeper recession.”

The Greek debt problem has been going on for seven years now and even with a triple bailout they still are in need of another. Creditors are calling for further pension cuts and continued austerity measures
as Greek pensions have already been cut by 18 percent. Greek debt continues to increase and is currently at 314 billion Euro or 180 percent of their Gross Domestic product. When will their problems ever end?

Other Euro Zone News

Since the elections in Holland and France are over, most European investors are feeling a lot better that
the chances of any other country leaving the EU have been taken off the table. Nonetheless, European Central Bank President Mario Draghi said on Monday that the EU still needs substantial stimulus. Some EU countries are calling for Draghi to start a strategy exiting the bank’s Bond purchases. Draghi, as well as our Fed President Janet Yellen, still sees a 2 percent inflation target rate needing to be reached before raising interest rates and cutting back on monetary policy.

We continue to share these off shores stories with you because the news that impacts the price of gold
can come from anywhere around the globe and not just here in the US.

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 advisers with respect to these areas. By posting this editorial, you acknowledge, understand and accept this disclaimer.