Fed Speaks But Old Man Winter Speaks Louder

The U.S. dollar edged higher and that helped knock gold down a bit, although moves in the currency and the commodity were modest. The buck moved up on a couple of news items.

More aptly, the euro moved down – that in the face of uncertainty over Greece, although some accommodation was made for the southern European country that so often teeters on the brink of insolvency. An ultimate resolution of the Greek debt crisis was pushed back for six months.

After a long hiatus, between-meeting chatter has begun by some FOMC voting members. We always find this unfortunate since it usually increases anxiety and uncertainty.

"At this point, I think June looks like the attractive option" to raise interest rates, Richmond Fed President Jeffrey Lacker said in a statement to reporters. "The data could change that, but it would have to be surprising data for me." He is hawkish, as a rule, and has been pushing for a rate rise in the first half of 2015 for some time.

San Francisco Federal Reserve President John Williams said the Fed is getting closer and closer to raising rates. Of course, that’s a meaningless statement because we all know the rise is coming at some point. He did offer language that implied the Fed should not be worried about roiling markets as the time grows closer to raise rates.

But, two votes do not a majority make.

Interestingly, the 10-year bond yield is within a hair of the 2.00% mark.

Another bearish outside market influence on gold today was the decline in the price of crude. It was down $2.84 or 5.00%

"Despite expectations of tightening balances by end-2015, downward market pressures may not have run their course just yet," said the monthly International Energy Agency inventories report.

Oil stocks held by countries in the OECD (Organization for Economic Cooperation and Development ) will approach their all-time high of 2.83 billion barrels in the middle of 2015, said the IEA, which advises western countries on energy policy.

The entire precious metals complex was down today, reflecting more of a pause, rather than some developing trend, it appears. We need to keep our eyes on the continuing crisis in the Middle East, and perhaps more importantly on Ukraine.

We expect the U.S. economy to take a hit from the hideous winter weather in the Northeast. The region that inscribes a triangle from DC to NYC and Boston then out to Chicago and back is going to see a slowdown. Let’s see how much of an economic fender bender the weather causes and how much the Fed takes the results into account.

Wishing you as always, good trading,