Federal Reserve Releases Report

January 18, 2017 - 5:27pm

 by Gary Wagner

Drawn from data collected on or before January 9, the Federal Reserve today released its latest economic report vis-à-vis the Central Banks Beige Book. Based upon data collected from the Fed’s 12 districts, the US economy is growing modestly with a tightening of the jobs market. According to Bloomberg News, the US economy continued to expand modestly from late November through the end of 2016 as a tightening labor market helped lift wages and prices more broadly, a Federal Reserve survey showed.

This data is key to current and future actions by the Fed as they slowly remove the monetary stimulus which has been the cornerstone to the economic recovery witnessed here in the United States. This data confirms that the rate hike of a quarter basis point in December of last year was justified, and properly timed. It also further justifies their current strategy of rate hikes in 2017, in which the Fed is anticipating a total of three interest rate hikes this year.

Fed Outlook Contains Uncertainties

With only 48 hours until Trump takes the oath of office and becomes the 45th President of the United States, uncertainty is still the underlying challenge that the Federal Reserve faces. The incoming administration has promised that they will initiate major fiscal policies to stimulate the US economy. These promises range from tax reforms to massive infrastructure rebuilding programs designed to dramatically increase America’s GDP. Members of the Federal Reserve acknowledged the potential from these programs but underlined the fact that Trump has not revealed any major details or concrete policy proposals he intends to bring to fruition.

Precious Metals Prices Fall

Needless to say, today’s Beige Book release put pressure on both gold and silver pricing. As of 4 o’clock EST gold is trading off by approximately $8.00 at $1205 per ounce, with silver giving up roughly 5 cents and is currently trading at $17.09. Our current models place current support in gold at $1200 per ounce.

The Road Ahead is Still Not Visible

One must be fully cognizant that the uncertainty surrounding this new administration will continue at least until inauguration. And even though that is only two days away, it will be the first seven days, as well as the first 30 days of a new Trump administration before we are able to see what transformations and policies will be implemented, as well as a much clearer timeline as to how these new policies and programs will unfold.

Until that point, the road ahead will be filled with uncertainty. But with only a couple of days until Donald Trump takes office, the fog of uncertainty is about to clear. Finally, US citizens will know whether Trump has the ability to turn promises into policy, and ramp up the US economy.

Wishing you as always, good trading,

Gary S. Wagner - Executive Producer

Sentiment Indicator:

Gold Forecast: Proper Action
On Thursday, January 3,  we sent out a special trading alert recommending the initiation of long positions in both gold and silver.
 
Yesterday we suggested that you raise you gold stop to below 1195. Today we sent out a trade alert: 
 
Today precious metals prices are coming under extreme pressure with the release of this month's beige book. As such gold is currently trading at 1202 to 1203 per ounce.  Our recommendation is aggressive traders can add to their position here, with stops for all long gold's below 1195. 
 
Maintain current long gold at 1180. Maintain second gold long @ 1203.
Maintain current stops under 1195
Maintain current long silver at 16.65. Maintain current stop under 1592
Gold Market Forecast

With the release of today's beige book by the federal reserve, traders witnessed a resurgence of US dollar strength, as well as underlying weakness in the precious metals complex.

However based upon the overwhelming uncertainty which exists as a new administration will begin in under 48 hours, we could expect to see continued volatility and further upside potential in the precious metals complex.

Trending Markets Forecast
Editor’s Note:  This week we are now streamlining our delivery of the trending markets module and have incorporated it into the daily and weekend Gold Forecast video for those that have signed up for the additional service.  
You will now see the additional markets commentary contained within a single report.