Dollar Keeping Lid On Gold

Dollar Keeping Lid On Gold

At the time of this report, around 5 am., we see the price of Platinum once again testing the $800 level.

Recently, Hedge Fund demand along with ETF investors have helped prop up the price, but on the technical side, the $800 level must hold or I expect the Hedge Fund Managers will give up on their speculative position that many of them have held from the beginning of the year.

This week the price of Gold has been under a little pressure from a rallying U.S. Dollar. Currently, the Dollar Index is trading over the 96.50 level keeping a lid on the price.

Reasons for Potentially Higher Gold Prices

Going forward, global economic worries should help the price of Gold head higher.

Here’s why.

A potential for a recession is developing in the EU, because of slowing economies seen in many countries and the fact that the Central Banks there have no tools in their belts to
deal with the problems facing them.

Over the pond, parts of the EU still have negative interest rates and were supposed to stop printing money, but that hasn’t happened. Subsequently the Central Banks have no ammo left.

Germany, historically the strongest economy, contracted last quarter and Italy’s debt problems continue to escalate. The UK’s Brexit outcome can cause major currency volatility between the Euro, Sterling and other global currencies.

Now let’s look at some major global headlines that could affect the price of Gold in the future:

The UK and Europe cutting growth outlook. China’s PBOC cutting reserve requirements. Australia RBA shifting to neutral. India RBI cutting rates.

The next question I have is, what tools does our Federal Reserve have at their disposal?

What has helped the Equity Markets here over the last five weeks is the fact that our Central Bank has done a complete 180. Pausing on their most recent strategy, the Fed went on to say that, depending on economic conditions, they may either lower rates or raise rates as necessary.

Now corporate earnings have not been great, forward guidance has been reduced. Going forward how much upside potential do stocks now have?

Will there be a deal in the trade in the trade talks with China? As I shared with you with in one of my recent news letters is the fact that there is a good number of Wall Street Traders that believe that these negotiations are way complicated and cannot be completed by the deadline set by the Trump administration.

Overall I believe that these problems will cause investors to start to rebalance their portfolios and head for safer investments.

Only time will tell.

Have a wonderful Friday.

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.