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« Is The Future For Silver Shiny Or Not? | Main | The Feds Rate Hike Weakens Gold and Boosts the Dollar »
Tuesday
Jan082019

The Precious Metals Sector To Shine As The Fed Blinks

Preamble

The Federal Reserve stuck to its guns last year and implemented rate hikes as planned. For the year ahead, they plan to hike rates two more times which would be supportive of the US Dollar, if this was a certainty. However, as always there is some doubt that they will do this, and the possibility exists that the Fed will not increase rates at all in 2019. The Head of the Federal Reserve, Jay Powell, recently told the American Economic Association that the Fed is not locked into a number of rate hikes and will be ‘listening carefully’ to the financial markets. His comments helped to steady the markets and aided a short-term bounce which may continue for awhile longer. However, the US Dollar suffered and given its inverse relationship with gold helped maintain gold prices.

Chart of the US Dollar

As we can see from the chart below the dollar has encountered strong resistance at the ‘97’ level and has recently fallen back on the Feds perceived slackening of monetary policy. We expect this trend to continue throughout 2019 and any rally to be short lived. In the near term the technical indicators; the RSI, STO and MACD are in the oversold zone at the moment, so a small short-term bounce could be on the cards.


Chart of Gold Prices

Historically gold has a better....... 

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No rate hikes in the near future should see the dollar trade lower, and gold gain some traction.... 2019 will be volatile for the PM sector.

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