Chairman Powell Indicates a Patient Federal Reserve

March 11, 2019 - 5:48pm

 by Gary Wagner

In a rare ‘60 Minutes’ interview on Sunday, Chairman Powell’s very first question was, “What are the greatest threats to prosperity. Have you stopped raising rates?”

Which he answered by stating, “Well, that’s a good question. We see the economy is in a good place. We think that the outlook is a favorable one. Inflation is muted, and our policy rate, we think, is in an appropriate place. So, what we’ve said is that we would be patient. “

On a follow-up question Powell was asked what he believes patience means. His response was, “We don’t feel any hurry to change our interest rate policy.”

He went on to explain the Fed’s rationale behind this more dovish monetary policy. He cited that the global economy is slowing down, although our own economy has continued to perform well.

These words are following an announcement made by the European Union central bank on Friday that they would maintain interest rates at current levels at least until the end of the year.

The Chinese government has signaled to increase its own monetary stimulus. According to Forbes magazine, “The surge in new credit in January was due to the lunar new year holiday… The combined 5.3 trillion RMB in for the first two months of new loans and aggregate financing is higher than the 4.3 trillion RMB pre-stimulus, 2018.”

In essence the three major central banks representing the United States, the European Union and China, are all signaling a much more accommodative and dovish stance in attempts to revitalize a global economy which data suggests has been slowing down.

These monetary policies collectively have revitalized the ‘risk on’ environment which has led to tremendous growth in global equities at the beginning of this week.

As far as the precious metals are concerned this more dovish policy should translate into higher pricing. However, today market participants witnessed a mixed bag in the precious metal’s markets with gold and silver trading lower, and platinum and palladium trading higher on the day.

The U.S. dollar provided a slight tailwind. Currently the dollar index is trading off by .13% and fixed at 97.145. However, gold remains under pressure after failing to close above $1300 on Friday.

Spot gold is currently fixed at $1292.90, which is a net decline of $4.80 on the day. According to the KGX (Kitco gold index) selling pressure resulted in a negative price change of $6.50, and a weakening dollar added a dollar $1.70 worth of value.

Our technical studies indicate that there is current support for gold futures at $1291 per ounce. With minor resistance at $1300 and major resistance at $1312 per ounce.

Wishing you as always, good trading,

Gary S. Wagner - Executive Producer

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Gold Forecast: Proper Action

Friday morning, March 8th, we issued a trade alert to buy June 2019 gold (GC M19)

Maintain long gold at 1305

Maintain Stop at 1287.13

Gold Market Forecast
Friday, March 8th, traders witnessed a key reversal in gold pricing. Since February 21 the market has been in a defined correction. This correction would take gold prices from the high achieved on February 20 at $1350 to a low yesterday of $1287.
Throughout the middle of last week we identified small bodied candles that can be labeled as “doji” candlesticks. This type of candle indicates indecision in the market and when you get a cluster of them, they can indicate a potential shift from a bearish market sentiment to a bullish market sentiment. 
However today we saw a tremendous spike in risk-on market sentiment. This put pressure on gold and silver pricing. Today’s video will look at our short-term observations of the markets.
Sentiment Indicator:
Gold -> Bullish
Silver -> Bullish
S&P 500 -> Bullish
Bitcoin -> Bearish