Gold Pops Following the Release of FOMC Statement

The final FOMC meeting for 2017 concluded today, and as far as gold prices are concerned, it ended with a pop rather than a whimper. Both gold and silver gained a well-needed boost as traders and market participants gleaned today’s statement attempting to gain insight into the current Fed monetary policy model.

It was widely anticipated that the Federal Reserve would announce one last rate hike for this year, which is precisely what happened. It was also widely anticipated that the Federal Reserve’s 2018 monetary policy would probably contain a total of three more rate hikes next year. The statement from the FOMC confirmed that assumption.

Inasmuch as today’s rate hike announcement along with the Feds monetary policy for 2018 were largely anticipated, it certainly wasn’t fully factored into current pricing for both gold and silver. Both precious metals quickly moved to higher pricing immediately following the release of today’s FOMC statement.

One assessment of today’s dramatic price climb in gold was that the current low inflationary level would make it difficult to stay the course next year with continued interest rate hikes.

In an interview with MarketWatch, Brian Lundin, editor of Gold Newsletter, said that today’s FOMC statement, “has once again straddled the line between the doves and hawks — noting how inflation has remained persistently and confoundingly low, but that economic growth remains sufficient for the central bank to plan for more rate increases in 2018. Not surprisingly, gold’s reaction has been positive ..., and that’s precisely what I expect, as the record of the last two years shows that year-end rate hikes have served as launching pads for big rallies in gold.” 

On a technical basis, gold pricing certainly found support during yesterday’s intraday low at 1238, which is a 78% retracement of the last major rally resulting in a $163 price gain in gold. At the same time, it must be noted that gold is still trading below both the 200 and 50-day moving averages.

We currently see resistance at $1264 per ounce, which is the 61.8% retracement of the same rally mentioned above, and $1268 per ounce which is where the 200-day moving average is currently fixed at.

Although today’s move is certainly impressive, gold pricing needs to close above those resistance points to confirm that yesterday’s low was, in fact, the conclusion to the long-standing correction which began in September when gold pricing reached the yearly high at $1363 and began to drift lower.

Wishing you as always, good trading,