You Can’t Always Get What You Want

May 2, 2019 - 6:09pm

 by Gary Wagner

As far as many precious metal traders are concerned the lack of any mention of an interest rate reduction in yesterday’s FOMC statement or Chairman Powell’s press conference left them feeling that “you can’t always get what you want”. Apparently, it was the U.S. economy that instead “got what it needed” with the data revealing a robust first quarter GDP at 3.2%.

In an article penned by Myra P. Saefong in MarketWatch, analysts at Zaner Metals said, “Apparently a number of markets were expecting to see signs that the Fed was leaning toward cutting interest rates, and those hopes were dashed by the upbeat economic assessment from the Fed Chairman press conference.”

Lower pricing in gold both yesterday as well as today that suggests the absence of any mention by Chairman Powell in regards to an interest rate reduction had a definitive bearish influence on gold futures.

There was one statement in particular at the beginning of his press conference which really made the point that it is highly unlikely that there will be a rate reduction in the near future. The statement was made minutes into his press conference when Chairman Powell described the current level of low inflation as likely transitory, and not persistent.

In Fact, many analysts site his use of the word “transitory” as the single word that sent many financial markets to lower values. These markets include U.S. equities as well as the vast majority of the precious metals including gold, silver and platinum.

According to Bloomberg, “Traders have been speculating that recent weaker inflation readings would concern the Federal Reserve so much that it would cut interest rates later this year. Powell knocked that idea, by explaining that the central bank still sees the weakness as the result of “transitory” factors, such as portfolio management services, lower apparel prices and airfares.”

In his press conference Powell spoke about the fact that he currently believes that there are a number of issues that are currently holding back inflation and it’s likely that these issues are transitory in nature. For example, like the change in cell phone rates that impacted inflation several years ago saying, “We are going to be watching these things carefully to see if that’s the case.” 

In fact, as far as interest rates go during 2019 Chairman Powell made it clear that currently the federal reserve is not looking at moving interest rates in either direction. It’s easy to extrapolate that from statements made by Jerome Powell that the current economi

Wishing you, as always, good trading,

Gary S. Wagner - Executive Producer

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Gold Forecast: Proper Action

We are currently Flat. Watch today's report to detail why we did not issue a sell reccomendation today.

Gold Market Forecast

Yesterday, as anticipated the Federal Reserve left their benchmark Fed's funds rate unchanged.The press conference held by Chairman Powell resulted in gold and the precious metals complex pivoting to the downside resulting in a seven dollar plus decline in gold pricing, an almost 3% decline in the price of palladium. Today we saw that trend continue with a further decline in Gold, silver and platinum.

All things being equal gold has now closed below now a critical support level. On today's report we will detail why today's close did not trigger a sell signal in gold.

Sentiment Indicator:
Gold -> Bearish
Silver -> Bearish
S&P 500 -> Neutral
Bitcoin -> Bullish