Gold falls as Fed hawks grow bolder
By Colin Twiggs
October 30th, 2015 4:00 p.m. EDT (7:00 a.m. AEDT)
Advice herein is provided for the general information of readers and does not have regard to any particular person's investment objectives, financial situation or needs. Accordingly, no reader should act on the basis of any information contained herein without first having consulted a suitably qualified financial advisor.
A quick summary of the Fed's latest FOMC statement released Wednesday:
- Household spending and business fixed investment increasing at solid rates
- Housing sector improved further
- Net exports remain soft
- Underutilization of labor resources has diminished since early this year
- Inflation remains below 2%, reflecting low energy prices
- Risks are balanced
- Inflation expected to rise gradually toward 2 percent over the medium term.
The hawks grow bolder as hourly manufacturing earnings rise — fueled by solid domestic performance — with net exports the only remaining concern.
Interest Rates and the Dollar
Long-term interest rates found support at 2.0% — the Fed's target inflation rate — with 10-year Treasury yields rallying to test resistance at 2.25 percent. Recovery of 13-week Twiggs Momentum above zero would signal an up-trend.
The Dollar Index is testing resistance at 98. Expectation of higher rates will fuel support for the Dollar. Respect of zero would indicate long-term buying pressure. Breakout above 98 would signal another advance.
Gold
Gold broke medium-term support at $1150/ounce after the latest FOMC statement. Higher interest rates and a stronger Dollar would both weaken demand for gold. Breach warns of a test of the primary level at $1100. A 13-week Twiggs Momentum peak below zero suggests continuation of the primary down-trend.
* Target calculation: 1200 - ( 1400 - 1200 ) = 1000
My peculiarity is that I don't have a particular style of investing or, more exactly, I try to change my style to fit the conditions.
~ George Soros
Disclaimer
Research & Investment Pty Ltd is a Corporate Authorized Representative (AR Number 384 397) of Andika Pty Ltd which holds an Australian Financial Services Licence (AFSL 297069).
The information on this web site and in the newsletters is general in nature and does not consider your personal circumstances. Please contact your professional financial adviser for advice tailored to your needs.
Research & Investment Pty Ltd ("R&I") has made every effort to ensure the reliability of the views and recommendations expressed in the reports published on its websites and newsletters. Our research is based upon information known to us or which was obtained from sources which we believe to be reliable and accurate.
No guarantee as to the capital value of investments, nor future returns are made by R&I. Neither R&I nor its employees make any representation, warranty or guarantee that the information provided is complete, accurate, current or reliable.
You are under no obligation to use these services and should always compare financial services/products to find one which best meets your personal objectives, financial situation or needs.
To the extent permitted by law, R&I and its employees, agents and authorised representatives exclude all liability for any loss or damage (including indirect, special or consequential loss or damage) arising from the use of, or reliance on, any information. If the law prohibits the exclusion of such liability, such liability shall be limited, to the extent permitted by law, to the resupply of the said information or the cost of the said resupply.
Important Warning About Simulated Results
Research & Investment (R&I) specialise in developing, testing and researching investment strategies and systems. Within the R&I web site and newsletters, you will find information about investment strategies and their performance. It is important that you understand that results from R&I research are simulated and not actual results.
No representation is made that any investor will or is likely to achieve profits or losses similar to those shown.
Simulated performance results are generally prepared with the benefit of hindsight and do not involve financial risk. No modeling can completely account for the impact of financial risk in actual investment. Account size, brokerage and slippage may also diverge from simulated results. Numerous other factors related to the markets in general or to the implementation of any specific investment system cannot be fully accounted for in the preparation of simulated performance results and may adversely affect actual investment results.
To the extent permitted by law, R&I and its employees, agents and authorised representatives exclude all liability for any loss or damage (including indirect, special or consequential loss or damage) arising from the use of, or reliance on, any information offered by R&I whether or not caused by any negligent act or omission.