Gold started the day lower in Asia on Sunday evening and there was no real reason to update Current Thoughts. Today we continued lower as the dollar was stronger but as the day wore on the dollar started to fall a bit and gold/silver rose. This is textbook inverse action that I have been saying is what to watch for micro trends. But overall it seems we have had a little bit of a reversal in metals take hold and we have to expect small bounces along the way. The dollar is still your key.
We also have the Fed interest rate decision this week and many think the Fed won’t raise rates. I replied to a comment on this with someone today and this is what I had to say;
When you (the Fed) talk up a story of recovery, which they point to improved employment data (U-3, not as much U-6), as their main reasoning, and the rest of the economy isn’t agreeing with said data, and your promise of rate increases subsides, they won’t take the opposite side and implement more QE immediately. They have to keep their credibility. So if they were dumb enough to raise rates, it will be a repeat of the beginning of January. If they don’t, I still think the market will sell off short term.
Until that time micro traders I lean bearish the metals and will once again say Fed week is volatile, so expect volatility.
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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