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Gold seems to be holding a key level of support at the $1,158 level in the February futures contact. Technical chart numbers reveal that this level is a must hold otherwise $1,132 is the next stop on this train.
Far East selling overnight put real pressure on the yellow metal, but strong Euro zone physical buying helping Gold stay afloat.
Silver still holding her own around the all-important $ 17.00 level.
All eyes will be on the Fed meeting mid-week, as a .25 basis point rate hike is virtually a done deal. What everyone is waiting for is not so much whether a rate hike will happen, but what the language reveals going forward on future rate hikes. The CME Watch tool shows a 5 percent chance of a rate hike at the next FED meeting in February and a 16 percent chance of a rate hike in March. So for the time being it looks like a one and done for at least the first quarter next year.
Some Financial advisors I spoke with this morning are still seeing a rotation out of metals and into equities. One prominent financial advisor indicated that he believes the equity market will continue its rally for at least another six months. Hard to argue against that statement with the momentum that’s in the market since the election.
In the event that the Fed has little to say on future rate increases gold should get a boost and rally from this very important support level.
A weaker dollar this morning is also keeping gold from heading further south. My only concern at the moment is seeing the 10-year treasury yield trading up this morning at 2.49 percent. Stronger bond yields along with a stronger dollar is bad news for our markets.
Wall Street day traders indicated this morning that algorithms are their tool for trading until the Fed speaks on Wednesday. Until then the very active Oil market is giving them the them best bang for their buck.
Author Name: Walter Pehowich
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