From the Trading Desk
Yesterday, the Federal Reserve maintained the status quo on its key interest rates for the third time this year. The Fed’s monetary policy stance remains accommodative with the goal being further improvements in the labor market and a return to 2% inflation. After gold’s typical volatile jitters immediately following the FOMC, the yellow metal calmed down leading into the Asian time zones. In the overnight session, gold was trending lower until the Bank of Japan surprised the market by refraining from adding to its monetary stimulus. This caught market participants off guard and the yen surged the most in over nine months against the USD. Gold was lifted off the lows of its session at $1,240 and rallied to $1,250 in a matter of minutes.
Gold came into the US trading day already buoyant and the release of US data gave it further legs. US first quarter GDP came in disappointingly at .50% versus the estimate of .70%. This was largely attributed to weak foreign demand and low oil prices. Gold extended gains for the fourth day in a row and finished near the double top at $1,270. Resistance above this level is coming in at $1,285, the high of the year so far.
Someone explain to me how this stock market can keep moving higher? It is running on empty. Where is the good news? How can the media ignore the elephant in the room that there is no good news? How is volatility not higher? Who’s fooling who?
I wrote to someone today that gold and silver are following the dollar and if you are long gold/silver/miners I would use a move over 96 in the Dollar Index to bail and if conservative a move over 95.
For the meantimes, as long as the dollar keeps moving south, now under 94, stay long and strong the metals. The Dollar Index is presently sitting at 93.73. My gut feeling (and research) tells me the next “news” of something occurring comes out of Europe. Mostly likely Italy but possibly Greece again. Stay tuned.
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About Doug EberhardtDoug 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
Disclosure:
Commodity Futures Trading Commission Futures and Options trading has large potential rewards, but also large potential risk. You must be aware of the risks and be willing to accept them in order to invest in the futures and options markets. Don’t trade with capital you can’t afford to lose. This is neither a solicitation nor an offer to Purchase/Sell futures or options. No representation is being made that any account will or is likely to achieve gains or losses similar to those discussed in this outlook. The past track record of any trading system or methodology is not necessarily indicative of future results.
All trades, patterns, charts, systems, etc. discussed in this outlook and the product materials are for illustrative purposes only and not to be construed as specific advisory recommendations. All ideas and material presented are entirely those of the author.