Yellen Speaks and Markets Shrug

August 26, 2016 - 5:20pm

 by Gary Wagner

Gary S. Wagner - Executive Producer

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Gold Forecast: Proper Action

This morning, just prior to Janet Yellen's speech, we issued a buy signal in gold

Maintain long gold @ 1332 (basis Dec COMEX contract)

Maintain stop below 1320

Gold Market Forecast

A most interesting day for the markets overall with the precious metals undergoing some extreme volatility as Janet Yellen concludes her speech, coupled with statements made by two of her chief lieutenants on the Board, namely Stanley Fischer, the vice chairman.

It seemed that the underlying tone to the majority of today's statements was about the "framework" of the big picture as it relates to future rate hikes, and more so the timbre of the way in which the Federal Reserve will handle interest rates and keep them low over the next couple of years.

Today's statements seem to be more about letting investors understand the big picture regarding what the Federal Reserve is trying to accomplish, as they briefly spoke about the possibility of a rate hike this year, but really hammered on the long-term picture in which they intend to keep rates low.

There's no doubt that traders and investors will need the weekend to digest the multitude of statements and words made by various members of the Fed and then cast their votes accordingly on Monday.

Trending Markets Forecast

A strong US dollar was the beneficiary of hawkish statements made by Federal Reserve officials – especially the vice chairman Stanley Fischer – alluding to the possibility of one or two rate hikes this year.

US equities, which traded modestly unchanged, moved to modestly lower after Janet Yellen's speech today. Inasmuch as Yellen's attempt to calm the markets were initially met with some support, further statements by other highly-ranked Fed members changed that demeanor quickly.

Sentiment Indicator: