Gold

As expected, a statement was released after September’s FOMC meeting by Chairman Powell. During his Press conference he expressed that tapering will begin “soon” with no clear-cut date for the initiation of the onset of tapering. The release statement said that “If progress continues broadly as expected, the Committee judges that a moderation in the pace of asset purchases may soon be warranted.”

Market participants, investors, and traders are waiting for the conclusion of the September FOMC meeting tomorrow. They will focus intently on the most recent Federal Reserve policy statement and the newly updated interest rate projections vis-à-vis the “dot plot” which will give projections through 2024.

Gold truly acted as a safe haven asset today. Equities worldwide incurred a tremendously deep selloff as concerns about the Chinese property group Evergrande’s solvency. The worldwide equity selloff began overseas and then continued into the U.S. equities markets. At its low today the Dow Jones industrial average was down 900 points before recovering. The Dow gave up 614 points in trading today and closed at 33,970.47, resulting in a net decline of 1.78%.

This has been an extremely difficult week for gold losing approximately $36. Gold futures basis the most active December 2021 contract opened on Monday at $1790 and is currently fixed at $1753.90. Today gold continued its decline, although only fractionally, declining $2.80 on the day.

Gold and silver prices both had a virtual meltdown following the release of a report by the U.S. Census Bureau detailing monthly sales for retail and food services in August 2021. The report indicated an increase in consumer spending of 0.7%, totaling sales of $618.7 billion.

After yesterday’s moderate upside move taking gold above $1800, technical selling pressure resulted in gold breaking back below $1800. Yesterday the Bureau of Labor Statistics released its inflationary report for August, indicating that the CPI (Consumer Price Index) increased by 0.3% last month. August’s rise in inflationary pressures came in under estimates by economists polled by the Wall Street Journal, who were expecting an increase of 0.4%.

As of 4:25 PM EDT gold futures basis, the most active December 2021 Comex contract is currently up $12.70 and fixed at $1807.10. Today’s moderate price advance taking gold above $1800 per ounce is a direct result of a government report indicating that the CPI (Consumer Price Index) showed that inflationary pressures contracted fractionally in August.

The key economic data the Federal Reserve relies on to guide the decision on its current monetary policy are the employment numbers, as well as inflationary data. The dual mandate of the Federal Reserve continues to focus upon maximum employment and inflationary pressures. The economic data from both the U.S.

There are three primary driving forces currently at play that have pressured gold prices lower. On a weekly chart, the prior four weeks have all resulted in a green candle (Friday’s close is above the opening on Monday), with higher closes when compared to the close of the prior week. That trend ended this week with the first instance of a lower close on a weekly chart compared to the preceding week.