Now that Janet Yellen’s comments about raising rates are more adamant than ever, we see how the dollar took the speech on Friday by heading south and gold hitting a short term bottom and moving higher. Could it be a medium term bottom? Possibly. If we don’t break a lower low on Monday, then odds are we never even hit the 100 day moving averaged I mentioned last week at 1213 and we’ll just take off higher.
What we still have to watch out for though is that darn dollar. What keeps it so strong isn’t as much Yellen and the threat of higher rates, but the mess called Europe. So if the Euro is down on Monday, this will make it more difficult for gold to move higher and we may test the lows one more time.
March 15th when the Fed meets it is expected by most now to raise rates. For me, this is about one of the dumbest things the Fed could do. GDP isn’t even above 2% and they want to kill what’s left of GDP strength by making it more difficult for businesses and consumers to borrow to expand or buy homes or purchase autos? Really?
While there are some bright spots that some at the Fed may point to, like a blip up in inflation or an improved employment market. they aren’t understanding the reasoning behind it. Oil prices moved up and that pushed some prices higher. And the unemployment rate actually ticked higher. How come no one points that out at CNBC?
We have one more unemployment data set coming out and that will be the final piece of information that dictates what the Fed does March 15th. Until then, expect choppy waters for gold and watch Europe for what the dollar will do as it directly affects the price of gold.
Doug Eberhardt is a 28 year financial services veteran and precious metals broker selling gold and silver at 1% over wholesale cost. Doug has written a book to help investors understand how gold and silver fit into a diversified portfolio, how to buy gold and silver, and what metals to buy. The book; “Buy Gold and Silver Safely” is available by clicking here Contact phone number for Buy Gold and Silver Safely is 888-604-6534
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