Trade Tensions Boost Gold

Trade Tensions Boost Gold

Gold investors are hoping to see the $1,300 price in the rear-view mirror as trade tensions increase between the U.S. and EU and as markets await clarity on the Brexit calamity.  We’re now just three days away from the UK cracking off from the EU if an agreement with Brussels is not put in place.

British Prime Minister May is in Brussels today for an emergency EU meeting focused on ironing out some kind of agreement. Some EU leaders are willing to give the UK an extension, but the complexity of all the negotiations between different EU countries only makes a compromise more difficult. In the end, I expect an extension to be granted, but no doubt, an unfavorable outcome could give the price of Gold a boost.

Gold Commitment of Traders ReportNow that prices have edged above $1,300 level, we must bring to your attention a significant short position of over 257,000 contracts shown in the most recent Commitment of Traders report. (Click the chart for larger view)

Any spark could create a significant short covering rally in the price of Gold, as resistance levels in the price are a good distance away.

Fed Watch

At 2 pm EDT today the Federal reserve will release the minutes from their last meeting. Traders will be trying to read the tea leaves to see if there is any significant information that the Fed chairman didn’t talk about at his last news conference.

Over the Pond

The European Central Bank is expected to hold steady their interest rates amid heightened economic risks. A slowing economy across all of Europe will not help to bring inflation back to their target of 2%. A rate hike is not expected for this year and there is even a growing argument to lessen the burden on banks from the negative deposit rate.

Have a wonderful Wednesday.

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.