Gold Rally Cut at the Knees but it Still has Legs

When the Federal Reserve Chairperson addressed a group in Massachusetts Thursday evening she reiterated the message of the Federal Open Market Committee (FOMC) of a week prior. The threat of an October interest rate action was thus reinforced, and the dollar rebounded. In effect, Janet Yellen offset the impact of the passing of ECB events last week without any new action by the European Central Bank, which had stabilized the euro versus the dollar and given gold lift. I still expect intensification of government shutdown concern this coming week and beyond to weigh on the dollar, and also for the October Fed meeting to pass without rate action, giving gold support. The risk to this view is that the Fed raises rates in October, which I believe would be a temporary setback for gold that could run into 2016 until investors begin to again anticipate European and global recovery and a normalizing dollar. If the Fed refrains from action in October, as I expect it should, precious metals prices should muster a run higher into November before again facing a Fed driven challenge. Long-term metals investors can expect a more sustainable upward trajectory to start in 2016 (likely second half), when the ECB is likely ready to end its quantitative easing program or if some other unforeseen factor comes against dollar strength. See the report on gold here.

Precious Metal Relative	09-25-15
SPDR Gold Trust (NYSE: GLD)	-0.6%
iShares Gold Trust (NYSE: IAU)	-0.5%
ETFS Physical Swiss Gold Trust (NYSE: SGOL)	-0.6%
iShares Silver Trust (NYSE: SLV)	-02%
ETFS Physical Silver Trust (NYSE: SIVR)	-0.3%
Market Vectors Gold Miners (NYSE: GDX)	-1.7%
Market Vectors Junior Gold Miners (NYSE: GDXJ)	-2.3%
Direxion Daily Gold Miners Bull 3X (NYSE: NUGT)	-4.0%
Goldcorp (NYSE: GG)	-1.0%
Randgold Resources (Nasdaq: GOLD)	-2.0%
Barrick Gold (NYSE: ABX)	+0.2%
Silver Wheaton (NYSE: SLW)	-0.8%
Coeur Mining (NYSE: CDE)	-5.5%

Please see our disclosures at the Wall Street Greek website and author bio pages found there. This article and website in no way offers or represents financial or investment advice. Information is provided for entertainment purposes only.