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moneymetals

Gold Market Consolidates Near Important Levels as Government Shuts Down

Inline image 1The gold market has been mired in a four-and-a-half year basing pattern. The rally that began late last year has taken prices up toward a major resistance zone. It’s make or break time!

Gold - jan. 19, 2018 (chart)

Also on the cusp of a potentially big move is the bond market.

Bonds haven’t been making headlines like the stock market, but where the bond market heads next could be crucial for stocks as well as metals (not to mention housing and lending).

The 30-year Treasury bond is forming a potential head and shoulders top. A sustained break below the major support line would confirm a new bear market in bonds. Lower bond prices would mean rising long-term interest rates – a potential precursor to rising inflation rates.

Bonds - jan. 19, 2018 (chart)

The government shutdown doesn’t do anything to inspire confidence in the creditworthiness of the U.S. Treasury.

Although no immediate threat of default exists, brinksmanship could escalate in future showdowns.

The government shutdown of 2011 caused the U.S. to suffer its first ever credit rating downgrade.

Senate Democrats pulled this latest political stunt over DACA – a controversial amnesty program for children of illegal immigrants. DACA affects very few Americans directly. It barely registers as a line item in the $4.1 trillion federal budget. Yet it caused the government to lock up and threatens to lead to a constitutional crisis down the road.

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