San Fran FED Chair Comments Impact Gold

Category: Market Reports
Author Name: Walter Pehowich
Posted: 05-23-2016 02:38:00 PM

These comments give the gold market sell signals and chases any nervous long-term investors from holding on to their positions.

It is inevitable that the precious metal markets will be influenced right after comments of any FED governor. This morning after a quiet Far East trading session overnight, we hear comments from San Francisco Fed governor Williams, who is calling for 2 to 3 rate hikes in 2016 and 3 to 4 rate hikes in 2017. So, if I can translate that language, that means by the end of 2017 we could see a Fed fund rate of 2 percent?

These comments give the gold market sell signals and chases any nervous long-term investors from holding on to their positions.

This Friday Janet Yellen will be honored at Harvard University with the Radcliffe Medal, presented annually to an individual who has had a transformative impact on society. Right after the ceremony Gregory Minkiw, the Robert M. Beren Professor of economics at Harvard University, will has a sit-down conversation with the FED Chairwomen to discuss her ground-breaking achievements. It is my hope that in that conversation she will bring some stability to these unsubstantiated comments made by her colleagues.

I guess no one at the FED is reading the newspapers or going online to see what’s going in Europe? The Germans and the French are closely watching the possibility of England leaving the EU. Many are screaming, as seen in the French media last week that France and Germany must find a way to strengthen the Euro, otherwise the future of the EU could be in jeopardy.

In my opinion this uncertainty will strengthen the U S dollar and will delay the FED’s ability to raise rates.

In the short term, as more and more comments of a rate hike are shared in the media by Fed governors, gold will have a continued sell bias to deal with.

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About The Author

Author Name: Walter Pehowich
This editorial has been prepared by 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.