A report released today by the government indicated tremendous growth in GDP Q4, coupled with the change of market sentiment for gold from yesterday’s release of the Fed's updated monetary policy resulted in gold trading sharply lower.

The FOMC meeting concluded today and as many expected, extreme volatility came into both the U.S. equities markets as well as gold. What was unexpected was the statement released by the Federal Reserve and how gold reacted to their updated monetary policy. Clearly, market participants had not factored in analysts’ and economists’ consensus of the outcome.

Although market participants are anticipating the certainty of a series of interest rate hikes, the completion of their tapering of monthly asset purchases resulting in a much less accommodative monetary policy, there is still concern about the Federal Reserve’s plan to reduce inflationary pressures by tightening their monetary policy.

Gold had moderate gains today as market participants await the policy decisions that will be revealed on Wednesday when the Federal Reserve concludes its FOMC meeting, releases its most current policy statement and holds a press conference with Chairman Powell.

With the tremendous decline in U.S. equities, it seems quite likely that market participants have been factoring in next week’s FOMC meeting and a more hawkish Federal Reserve. Can the same be said for market participants actively investing or trading in gold or silver?

Except for gold, the remaining precious metals traded on the futures markets had solid gains continuing the precious metals rally. Although gold was the only precious metal to close with modest declines, on closer inspection it was all about dollar strength rather than a lack of buying interest that moved gold lower on the day.

It was a combination of events that resulted in dynamic gains across-the-board in the precious metals markets today. Three primary concerns have elevated the bullish market sentiment that has already been in play in the precious metals markets, today however it seemed as though these concerns were magnified.

A combination of factors stemming from the upcoming FOMC meeting have pressured U.S. equities lower, moved U.S. Treasury Notes and bonds higher, and had a substantial impact on taking the U.S. dollar higher. This month’s FOMC meeting is scheduled to begin one week from today, on January 25, and conclude on the following day.

Gold continues to trade in a range-bound manner, but over the last five weeks, gold prices have gained value during four of those weeks. Although gold has traded lower yesterday and today, ending the week with a moderate gain of 0.6%. For the most part, we have seen gold trade through the eyes of the weekly chart with a succession of higher lows.

Multiple sectors and asset classes in the financial markets came under pressure today as market participants prepare for the real possibility that the Federal Reserve will begin a series of multiple interest rate hikes beginning in March of this year.