Today we got the news we were expecting from the Fed, no raise in rates. Those at CNBC may not understand why but the Fed is catching up to the fact that the economy isn’t ready for a rise in rates. They are giving over an 80% chance they will raise rates in March now and I give it 0%.
It’s not easy to be in a position where the Fed dictates how markets move rather than fundamentals but that is how the markets have traded. Gold is waking up to the Fed incompetence but it is not flying up out of fear in the markets just yet. The markets are also trading on what oil does of late, almost perfectly.
The dollar though is the reason gold got a bid today to move higher. After the Fed announcement when you look at the chart you can see a straight red line down in the Dollar Index.
Gold did have a pullback after the announcement right to yesterday’s highs. The dollar is still going to fall I believe and give us a little more gold love. $1,138 is the next resistance and $1,150 major resistance. Not sure we get there. The dollar will let us know though. It would need to continue falling.
No, we are not off to the races yet. Not even close. I say that with all sincerity and not to be pompous about it. Gold has one more leg down in it and the market is giving you a little hint of what it can do. Little. Mining stocks still have a ways down and so does gold. We’ll trade the ride up in the meantime but gold has to stay above this $1,118 level and move past $1,125 for it to get to the next leg up.
Doug Eberhardt is a 28 year financial services veteran and precious metals broker selling gold and silver at 1% over wholesale cost. Doug has written a book to help investors understand how gold and silver fit into a diversified portfolio, how to buy gold and silver, and what metals to buy. The book; “Buy Gold and Silver Safely” is available by clicking here Contact phone number for Buy Gold and Silver Safely is 888-604-6534
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