If the majority of market analysts are correct, when they proclaimed that investors and traders have been factoring in a series of rate cuts by Federal Reserve, along with rate cuts by other global central banks, then why did gold rise by almost $45 today?

I cannot think of many organizations or people that can convey a 180° pivot by the use of a single word, except for the Federal Reserve and its chairman, Jerome Powell. When we looked at the CME’s FedWatch tool yesterday it predicted less than a 20% probability that the Federal Reserve would announce and implement a rate cut today. In fact, that is exactly what happened.

As we look at this year, besides from the rally which began in mid-August 2018 up to the former record high of this year, it is clear to see that that was possibly the only noteworthy and extended rally we have seen since 2017.

The next couple of weeks will be absolutely critical in terms of statements made by both the Federal Reserve and the presidents of the two superpowers when they meet in Osaka Japan later on this month.

While on the surface it seems that gold prices finished rather flat in trading today. The actual truth is that gold gained moderately as buyers bid the precious yellow metal higher, however extreme dollar strength dwarfed those gains. Spot or physical gold closed today at $1341.10, which is a net decline of $0.80 on the day.

Gold has once again found its footing and now for a second consecutive day has closed higher when compared to the previous close, and gains have included both a higher low as well as a higher high. As of 5:00 PM EDT gold futures basis the most active August contract are currently fixed at $1336 per ounce which is a net gain of $9.20 on the day.

After trading to lower prices on Monday and Tuesday of this week, gold has staged a moderate recovery. Monday’s action resulted in a $10 drop in price, this occurring after a phenomenal rally which began on Thursday, May 30. This would mark the beginning of seven consecutive days which resulted in higher closes when compared to the previous day.

Gold is trading fractionally higher today, with the most active futures contract (August 2019) currently bid up by $1.40, this as of 5 PM Eastern daylight Time. However what is most impressive about today’s move was the fact that gold closed very much off of the lows achieved today which came in at $1323.60.

On February 20 of this year gold pricing peaked at $1350 per ounce, the highest value gold has achieved this year up until recent action. For almost 5 months following the highs achieved on February 20 gold prices methodically and slowly corrected, giving up roughly 50%of the gains that were achieved from October 2018 until the middle of January.

There has been an extended rally in both US equities and gold pricing this week. Both asset classes have moved to higher ground. Gold and equities running in tandem with price advances for a sustained time period is a rare occurrence. Typically, these asset classes have an inverse correlation.