FOMC begins, and traders await Fed statement and Powell’s press conference | The Gold Forecast

FOMC begins, and traders await Fed statement and Powell’s press conference

March 16, 2021 - 6:55pm

 by Gary Wagner

Eight times per year, members of the Federal Reserve officially meet and hold their Federal Open Market Committee. The FOMC is composed of 12 members, seven of which comprise the board of governors, with the remaining five being presidents of Federal Reserve banks. The eight yearly meetings are roughly six weeks apart, issuing the most current monetary policy by means of a written statement released immediately following the conclusion. This statement summarizes the Fed member’s current economic outlook and any relevant policy decisions that were made over the two-day meeting. Following the statement, Federal Reserve Chairman, Jerome Powell, holds a press conference so that he can discuss any decisions made during the meeting but, more importantly, provide context regarding any decisions they made.

The last time Chairman Powell spoke publicly was at a Wall Street Journal webinar in which he did not push back when asked about rising yields in Treasuries and how they reflect the current monetary policy to keep interest rates where they are at least till the end of 2021, and most likely 2022.

According to the Economic Times, “The Federal Reserve’s monetary policy meeting this week is a chance for the central bank to get back on the same page with the bond market. The challenge will be pushing back market expectations that an interest rate increase could come as soon as the end of next year. How it delivers that message convincingly will be key.”

Although the chairman has made it emphatically clear that the reasons that would justify changing their current monetary course will be much different than in the past, he has gone to great lengths to explain that the Fed has a new basis which is to wait for economic outcomes to be fully achieved before implementing a rate increase, unlike the actions during the financial crisis in 2008. During that period, many economists believed that the Federal Reserve acted too early, thereby lengthening the timeline for economic recovery.

One way that the Federal Reserve will reiterate their commitment to keeping rates low is the release of a summary of economic projections, which will be included in the statement released tomorrow.

However, Chairman Powell must continue to walk a tight rope between the optimistic outlook on economic growth that has been coming from Wall Street as opposed to their monetary policy, which is to raise the bar necessary to implement an interest rate hike. To that end, their former dual mandate of maximum employment and to keep inflation at 2% or lower has been modified. The Federal Reserve is on record stating that they will let inflation run hot to 2 ½% or higher to achieve their primary goal of maximum employment.

Analysts and market participants will listen not only to the words spoken by Chairman Powell during the press conference but how his statements are delivered and how they are perceived.

The major issue right now is that the top members of the Federal Reserve have been reluctant to push back against the recent jump in treasury yields. They will also want to know if the central bank its monthly asset purchases of $120 billion to buy long-dated debt or increase their monthly expenditure.

The bottom line is that more Americans are returning to work. However, that is tempered by the fact that there are still over 9 million Americans unemployed. Although many analysts polled, believe that it is highly possible that there will be some revisions to the outlook, specifically revising of the GDP projections higher.

Recent events had taken gold off of the lows, which occurred on March 8 when gold futures touched briefly below $1680. Currently, gold futures basis, the most active April 2021 contract was trading up $1.10 and fixed at $1730.30. The fact that the Federal Reserve is willing to let inflation run hotter than its former mandate provides a bullish tailwind for the precious yellow metal. When you add the most recent fiscal stimulus aid package passed last week, there is a case to be made for increased bullish tailwinds for the safe-haven asset; gold.

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Wishing you, as always, good trading and good health,

Gary S. Wagner - Executive Producer

This report is now free and publicly available to everyone

Gold Forecast: Proper Action

On March 10th we issued trade alert to buy gold and silver.

On March 16 we raised stops to

Futures: GC 1690. SI 25.3 ----- Forex: . XAUUSD 1690. XAGUSD 25.3 -------- ETF's: GLD 159.35. SLV 23.5

Futures contracts:
Buy April 2021 gold (GC J21) @ the market current $1722.80. Place stop at $1665
Buy May 2021 (SI K21) @ the market current $26.26. Place stop at $24.70

Electronically Traded Funds:
Buy GLD at the market current $161.55. Place stop at $156.95
Buy SLV at the market current $24.24. Place stop at $22.50

Forex / spot markets:
Buy Forex gold @ the market current $1724.40. Place stop at $1667
Buy Forex silver @ the market current $26.17. Place stop at $24.75

On February 18 we entered a long April Platinum trade. In at $1282. Our stop was hit today (02/26/21) @ at $1217.00
SILVER FUTURES MARCH: Entry at $27.36, and then closed the trade later @ $27.45.
XAGUSD: Entry at $27.26,, our stop was hit at $27.39

We closed our positions in SLV:
First leg SLV: @ 22.95 .out at @ $24.99
Second leg SLV @ 24.60. out at @ $24.99

On Thursday February 4 stops were hit on our long GLD ETF. We entered at 172.14. Our stop was hit at $168.29 (the open on Thursday) for a $3.85 loss per share.

GOLD FUTURES APRIL: Entry at 1845 - 1859 . Stop hit at 1813 - average loss $3900 per contract
XAUSUD: Entry at 1845 - 1857 . Stop hit at 1813 - average loss of $38 per oz
SILVER FUTURES MARCH: Entry at 25.42 - 25.46 . Stop hit at 24.11 - average loss $6650 per contract
XAGUSD: Entry at 25.33 - 25.40 - Stop hit at 24.11 - average loss $1.3 per oz
long February gold @ $1890.00 and stop hit @ $1902.20, for a profit of $1202.00 per contract
long Forex gold @ $1886.00 and stop hit @ $1898 for a profit of $12.00 per OZ
long March silver @ $26.31 and stop hit @ $26.41 for a profit of $500.00 per contract
long GLD @ $177.26 and stop hit @ $178.00 for a profit of $0.71 per share
long SLV @ $24.67 and stop hit @ 25.00 for a profit of $0.33 per share
long February Gold Futures at $1860-$1866 and stop hit at at $1869. Average profit $600 per contract
long XAUUSD at $1856-$1862 and stop hit at $1866. Average profit $6
long March Silver Futures at $25.16 - $25.25 and stop hit at $25.30. Average profit $450 per contract
long GLD @ $174.12 and stop hit at $175.78 for a profit of $1.66 per share
long GLD @ $174.12 and stop hit at $175.78 for a profit of $1.66 per share
long February Gold Futures at $1830 -$1843 and out at $1850 for a profit of $700 to $2000.00 per contract
long XAUUSD at $1841 and out at $1850 for a profit of $90.00 per mini 10 oz contract
long March Silver Futures at $24.29 and out @ $24.40 for a profit of $550.00 per comex contract
long GLD @ 1$71.50 and out @ $173.00 for a profit of $1.50 per share
long SLV @ $22.30 and out @ $22.50 for a profit of $0.20 per share
Long December gold at $1899. Stop hit at $1918, for a $1900 profit
Long forex gold at $1896.00. Stop hit at $1912, for a $1600 profit
Long December silver at $24.21. Stop hit at $25.07 for a $4300 profit
Long GLD at $180.46 and stop hit at $176.42 for a loss of $4.04 per share
Long SLV at $23.23 and stop at $22.78 for a loss of $0.40 per share
Long December Gold Futures at $1926 and stop hit at $1907.30 for a loss of $18.70 per ounce
Long Forex Gold at $1922 and stop hit at $1903 for a loss of $19.00 per ounce
Long December Silver Futures at $25.13 and stop hit at $24.73 for a loss of $0.40 per ounce
Long December gold at $1890, out at $1909.30 for a profit of $1,930.00
Long December silver at $23.95, out at $24.50 for a profit of $2,750.00
Long Forex gold at $1883.68, out $1907 for a profit of $23.32 per ounce
Long GLD ETF at $178.03, out at $179.80 for a profit of $1.77 per share
Long SLV ETF at $22.66, out at $22.03 for a loss of $0.63 per share

Gold Market Forecast

The big question that analysts, economists as well as market participants are asking is what will be the outcome when the FOMC meeting concludes tomorrow. It is expected that there will be no primary change in the monetary policy, meaning maintaining low interest rates and quantitative easing by purchasing $120 billion worth of assets each month by the central bank.

As to whether or not the Fed will push back in regards to rising yields in U.S. Treasury notes will be addressed differently than when he spoke during a Wall Street journal webinar. People will listen to not only the words he speaks but how he says them and whether or not his words can soothe or calm the market.

A new twist will be added to this month’s statement which is the release of a summary of economic projections which will be added to tomorrow’s statement.

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