FOMC Meeting: What To Do With Gold Now…
October FOMC Meeting Done – Now What?
As you’re likely aware, the US Federal Reserve announced the results of their FOMC meeting yesterday afternoon.
Let’s just say the outcome was not what gold bulls were hoping for…
While the Fed kept rates unchanged at 0%, they deleted some very important language from their announcement.
Let me explain…
In September’s FOMC statement, this language was present…
“Recent global economic and financial developments may restrain economic activity somewhat and are likely to put further downward pressure on inflation in the near term.”
That important sentence was erased from the October statement released yesterday.
What’s the big deal?
From my perspective, it appears the Fed is dropping their excuses for not raising rates.
In fact, yesterday’s policy statement suggested a rate raise could come as early as December.
While I highly doubt they’ll send rates higher during the most important retail sales period of the year, they could do it soon after. Of course, rising interest rates would put a sharp headwind in front of the gold market.
Judging by metal’s reaction to yesterday’s news, gold bulls may have some tough sailing ahead.
Take a look…
chart courtesy: finviz.com
As you can see, the yellow metal reversed sharply lower once investors analyzed the Fed’s October statement. Gold plunged $25 an ounce from the intraday high of $1,182 an ounce to close near $1,156- a bearish reaction indeed.
Now, let’s back up a minute…
In recent issues, we’ve been discussing the likelihood of a big gold rally. With the yellow metal rising to important technical resistance in October, there was a distinct possibility of a year-end run to higher prices.
But thanks to yesterday’s Fed meeting, gold bulls had that door to higher prices slammed firmly in their face.
As it sits now, gold bears will likely regain market control.
In fact, I wouldn’t be surprised to see the yellow metal drop back to the $1,100 area in coming months.
Of course, there’s always the possibility of an extremely bad economic data point that will change the Fed’s outlook. If that happens, we’ll have to reassess the situation. But until we see such a predicament, gold will likely remain in its multi-year downtrend.
How do you capitalize on this situation?
Here’s a list of the best ETFs to reap profits from gold market moves.
Until Next Time,
Justin Bennett
Commodity Trading Research
BIO: Justin Bennett is the head commodity research analyst at Commoditytradingresearch.com. With over a decade of real world trading experience, he finds ways for you to consistently profit from movements in commodities and the companies producing them. Sign up for our free reports and commodity newsletter at https://commoditytradingresearch.com/free-sign-up.
Category: Commodity Trading
