The late September, early October rally in gold, really looked like it had some legs. But once again, that pesky Dollar comes screaming back. The US Dollar is trading at twenty-two-year highs! For precious metals the path of least resistance remains down. Bottom line is US inflation remains HOT! Doesn’t gold usually perform well under strong inflation? One would think so. However, gold cannot compete with the Dollar and US Treasuries. Treasuries are really gaining popularity as the “place to be”! Safe and good returns guaranteed. US inflation data this week, especially today’s stronger than expected CPI coming in at 8.2% year over year sends a crystal-clear message. Inflation is not slowing down, and the Fed is not likely to pause any time soon. In fact, we should expect additional BIG rate hikes over the next few FOMC Meetings.

Gold cannot hold rallies in this environment of raising rates. I expect that today’s action in gold leads to a retest of the $1,625 range. A close above $1,710 is needed to get this broker excited about gold.

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Frank J. Cholly

Senior Market Strategist

Frank is a swap registered trader who brings his clients more than twenty-six years of commodity futures experience. He was a member at the Chicago Board of Trade for 10 years where he filled orders in the grain and financial pits. Frank was also a Lind-Waldock's floor manager for ten years and later joined on as a commodities broker.

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