Gold Rises With Small Assist From Dollar Retreat

While there is going to be continuing speculation regarding the possibility of an interest rate hike by the U.S. Federal Reserve, there are some countervailing reasons as to why one should hold gold in a balanced portfolio.

Yes, a rate hike, which seems more and more likely come December (or earlier) would make the opportunity cost of holding gold higher. However, we have a few crosscurrents of uncertainty that tells us gold is an important asset right now.

There is the shadow of Brexit that must by needs fall across the UK and the EU at some point. Yes, everything seems fine now, but we are by no means out of the woods.

There is the unsettled nature of geopolitics in the Middle East, Turkey and the rim of the Russian Federation.

There are the U.S. elections, which will present challenges regardless of who becomes president next. (Uncertainty will be creeping about like a fog.)

Additionally, cyclically we are in the midst of the longest bull market in history and, while there may be some miles to go on it, at some point it will falter.

Finally, there are many who believe that rates are still too high to foster better economic growth and that the U.S. will eventually have to resort to negative rates.

So, there are many good arguments for tucking a contract or two of gold in your book when given the technical go ahead.

Crude oil, after taking a brief breather, fell back again today, settling 0.58% lower and then continuing on its way down in after-hours trading. West Texas Intermediate is down almost 0.70% at 4 PM in New York. Brent North Sea has fallen by about 1.00%.

Yesterday’s chatter about a possible production freeze or cutback by oil-producers led by OPEC sputtered and, as everyone knows, supply and potential supply are vast.

"The oil market remains in a battle between the trading community which focuses in the shorter term data and information which has been mostly bearish, versus the investment trading crowd which is focused on the medium-to-longer term which is projected to be bullish," said Dominick Chirichella, senior partner at the Energy Management Institute in New York.

"Both WTI and Brent will have to move above the $50 per barrel level and remain there for the shorter-term traders to regain confidence that the market is embarking on a new up leg," Chirichella concluded.

The faltering price of crude helped restrain U.S. equities. The S&P 500 and NASDAQ had touched record highs earlier on an intraday basis. The Dow Jones Industrial Average also backed off its high of the day.

One note that should be taken concerning stocks. The U.S tech sector is helping to keep the ship of upward price movement forging ahead.

Wishing you as always, good trading,