Roy’s Commentary 1/27/16

Precious metals continued moving higher yesterday as gold and silver tested resistance levels at $1,125.00 and $14.50. Fueled by uncertainty over the health of the U.S. economy, many “experts” are now calling for no more than two rate hikes by the FOMC this year. Earlier consensus opinion along with comments by FOMC members had all markets pricing in four rate hikes in 2016.  The result of fewer rate hikes should be favorable for gold and the commodity sector as a USD that does not rally, and perhaps actually weakens, would be very supportive for precious metals. The extreme volatility in the stock market may also be lending a hand in the recent rally as equity investors make changes to their portfolios. Month to date figures show ETF holdings in gold have risen almost 4.00 percent in January. Later today, we will get a statement from the FOMC as they conclude their first meeting of 2016. A dovish tone could send gold towards the 200 day moving average at $1,133.00 while silver takes a look at the 100 day average which is $14.65.