The dovish tone of the FOMC minutes brought about the expected reactions in all markets this week, driven by the growing concerns of voting members over the strength of the USD and its negative implications for economic growth.
The dovish tone of the FOMC minutes brought about the expected reactions in all markets this week, driven by the growing concerns of voting members over the strength of the USD and its negative implications for economic growth. Couple this with growing fears of a global economic downturn, led by the woes in Germany, and all of a sudden interest rate hikes in the first half of 2015 no longer look like a guarantee. Besides the continued sell-off in global equities and the extreme volatility in U.S. equities this week, we are also seeing a major sell-off throughout the energy complex and a continued rally in the bond market.
Falling energy prices led by the free fall in crude oil have weighed on precious metals this week and may be further proof that an economic downturn is already upon us. The short term implications for precious metals may not be good, but beyond that the picture may turn brighter as hedge fund, mutual fund and portfolio managers look for investments that produce a positive rate of return. In the short term, with gold driving the market, look for support at $1,215.00 and resistance at $1,245.00 – $1,250.00. A break below $1,180.00 or above $1,265.00 sets the stage for a big move.
This editorial has been prepared by Roy Friedman of Dillon Gage Metals. This document is for information and thought-provoking purposes only and does not purport to predict or forecast actual results. It is not, and should not be regarded as investment advice or as a recommendation regarding any particular security, commodity or course of action. Opinions expressed herein are current opinions as of the date appearing in this editorial only and are subject to change without notice. Reasonable people may disagree about the opinions expressed herein. In the event any of the assumptions used herein do not prove to be true, results are likely to vary substantially. All investments entail risks. There is no guarantee that investment strategies will achieve the desired results under all market conditions and each investor should evaluate its ability to invest for a long term especially during periods of a market downturn. 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. This information is provided with the understanding that with respect to the opinions provided herein, that you will make your own independent decision with respect to any course of action in connection herewith and as to whether such course of action is appropriate or proper based on your own judgment, and that you are capable of understanding and assessing the merits of a course of action. You may not rely on the statements contained herein. Dillon Gage Metals shall not have any liability for any damages of any kind whatsoever relating to this editorial. You should consult your advisors with respect to these areas. By posting this editorial, you acknowledge, understand and accept the foregoing.