Most of the Wall Street Gold traders I speak with daily have left already to enjoy the Memorial Day weekend. I can’t say I blame them as the beginning of the holiday weekend is shaping up to be spectacular here in New York with the second half not so good.
Very quiet trading activity in both the U.S. dollar and in the bond market this morning. I guess that’s expected as the weekend begins and not much news to report at the end of the week.
The Dollar and The Fed
The dollar bouncing off a five month high earlier this week giving Gold a boost. Also the news about the cancellation of the North Korea summit has given the price of Gold a temporary platform to sit on.
The Dollar’s recent rally has been supported by strong economic data and a solid equity valuations. What I find interesting is that the Federal Reserve is still on track to raise rates two or more times this year where other central banks like the Bank of Japan and the European Central Bank are not in a tightening mode. With Equity markets trading sideways and the Fed possibly willing to wait for stronger inflation numbers before raising rates, will we see a less aggressive Fed policy in the end? We all know that the Fed has been reactive and not proactive in the past. I expect them to keep a dovish tone until they are forced to raise rates.
If you remember last week we discussed the technical advantages of trading Gold using the RSI indicators. That is panning out to be right on the mark. Technical indicators of an RSI at 30 when the price of Gold reached the $1,285 level gave Wall Street Gold traders a buy signal. These are the traders who only use charts to enter and exit the markets. I call them “The Gold Geeks.”
Currently they tell me they are comfortable staying long at this juncture.
Enjoy the holiday weekend.
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.