Does Fed Know Something Gold Investors Do Not Know?

The Fed doubled down on its dovish stance. What card will gold play now?

Fed Remains Patient

Yesterday, the FOMC published the monetary policy statement from its latest meeting that took place on March 19-20th. In line with the expectations, the US central bank unanimously kept its interest rates unchanged. The federal funds rate remained at the target range of 2.25 to 2.50 percent:

The Committee seeks to foster maximum employment and price stability. In support of these goals, the Committee decided to maintain the target range for the federal funds rate at 2-1/4 to 2-1/2 percent.

Continue reading

Radical Gold Underinvestment 3

By Adam Hamilton – Re-Blogged Fron http://www.Gold-Eagle.com

Gold was again blasted to new post-election lows this week, further trashing contrarian sentiment.  The Fed proved more hawkish than expected in its rate-hike-trajectory forecast, unleashing heavy selling in gold futures.  This catapulted gold bearishness back up to extremes not seen in a year.  Investors are once again convinced gold is doomed, and thus radically underinvested.  That’s actually super-bullish for gold.

It certainly wasn’t the Fed’s second rate hike in 10.5 years this week that hammered gold.  Actually that was universally expected.  Federal-funds-futures traders had assigned it an average 96% probability in the two weeks leading up to that rate hike.  If the Fed had simply raised its federal-funds rate by 25 basis points to a 0.50%-to-0.75% range, gold-futures speculators would’ve likely yawned.  They knew it was coming.

The unexpected hawkishness came in the FOMC’s Summary of Economic Projections that is published quarterly at every other policy meeting.  Also called the “dot plot”, it shows where each FOMC member and regional Fed president expects the FFR to be in the next several years and beyond.  The collective expectations of these top officials who actually set monetary policy grew from two rate hikes in 2017 to three.

Continue reading