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Gold Staggered By Stronger Dollar and Risk On Sentiment In Equities

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You can assign any reason (or blame, if you think that way) for gold’s falling star act today.

Yes, Janet Yellen did reinforce the conclusions communicated after the FOMC meeting last week. So identical to the FOMC statement were her opening remarks that preceded her Congressional testimony in the next few days that there is no purpose in repeating them.

“Caution,” “uncertainty,” and “risks,” were the bywords. We consider her identical statements last week and this as a response to those few who believe the Fed has muddied the water. Well, it’s crystal clear as of right now.

Next we have the lifting a bit more of the Brexit fear. The 23rd and the referendum in Britain can’t come soon enough so we can get on with even more fundamental fundamentals. But, the inclination in the markets is to believe it won’t happen.

Gold is off about $22.00 per ounce in mid-afternoon trading with the resurgent U.S. dollar accounting for about 25% of the loss. The rest of the loss is attributable to regular trading. Investors are seeing opportunities in stocks.

Silver is off about 21 cents, with a similar dollar drag on its price. Platinum is off not quite 1.00% but fickle palladium is up about $2.00 per ounce.

Just for the record, the dollar is up not quite 0.50% against the euro, higher by 0.80% against the yen and up, surprisingly enough, against the British pound, though by just a quarter of a percent. The yen, of course, functions as a haven play and today is not a risk-off day. The greenback is off almost imperceptibly against the Swiss franc, another important currency haven.

U.S. benchmark oil closed off 1.00% at settlement, although it continues to trade into the afternoon, after hours. But the West Texas Intermediate crude quote is well off its opening lows of $48.19 per barrel.

As you know, we are real Fed watchers here at the Gold Forecast. We are in wonderment when a Senator (in this case Shelby of Alabama) begins grilling Yellen to show how tough he is.

Not that he doesn’t have the right or even duty. But the Congress has scarcely involved itself in the economy since 2009 and honestly, while monetary policy can be an important rudder and perhaps a sail, it is fiscal policy – and other kinds of legislative policies – that make the economy go.

If you live in an interventionist world, you can’t hum a laissez-faire tune. The world nowadays is far too interconnected.

Additionally, the Congress needs to understand that there are limits to monetary policy, especially in the face of powerful secular factors.

Wishing you as always, good trading,

Gary S. Wagner - Executive Producer