DMR-Gold suffering after-effects of Fed announcement

DAILY MARKET REPORT

Gold is suffering the after-effects of yesterday’s Fed announcement – one in which the central bank essentially pledged to stay the course on interest rates for the foreseeable future.  Gold is down $12.00 on the day at $1211.  Silver is down 22¢ at $14.24.  A weaker yuan is also a factor in gold’s pricing this morning.  Most of the damage was done during European trading hours where the weak euro/strong dollar sentiment continues to weigh on financial markets.  Meanwhile, back in the United States, core producer prices registered a .6% gain, or 7.2% annualized – the largest increase since 2012 and something of a vindication for the Fed’s interest rate stance.

Quote of the Day
“I think we’re getting to the point now where the breakout is going to be on the inflation upside. The only question is when.” – Alan Greenspan, February 2018

Chart of the Day


(Interactive chart)

Chart note:  This interactive chart compares price appreciation for gold and the dollar index.  Gold has consistently outperformed the dollar in twelve of the last eighteen years – a formidable record.  Even if one were to add in average yields on dollar-based investments, gold still comes out the clear winner in those twelve years. Gold is having an off-year thus far in 2018 – down 4.6% while the dollar is up almost 6%.  Given the performance record, though,  contrarian investors might see the present disparity as a buying opportunity.

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