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Bearish Sentiment Continues As Traders Await Start Of The FOMC Meeting

Commentaries & Views

With the FOMC meeting scheduled to begin tomorrow, market participants have continued the bearish market sentiment so prevalent last week. Since reaching a high just below $1300 on June 6th, gold prices have traded lower. Gold prices have continued to decline for the last four consecutive trading days.

According to the CME’s FedWatch, there is an extremely high (mid 98.96%) probability that this month’s FOMC meeting will result in an interest rate hike. In most likelihood, an interest rate hike has already been factored into the markets.

Although most analysts believe that current pricing has fully accounted for any interest rate hike, questions remain as to what the Fed will do with the 4 ½ trillion-dollar assets on their balance sheets. While it is clear that the Fed plans to begin liquidation of many of these assets, the timing and quantity of asset sales are a huge unknown.

In an interview with MarketWatch, Brian Lundin, editor of Gold Newsletter, said he believes the Fed meeting will be positive for gold, regardless of what happens.

“If the Fed raises rates as expected, it will alleviate some short-selling pressure on the metal as traders exit those positions on the news,” he said. “And if for some reason the Fed decides not to raise, it would be a significant dovish signal that would send gold even higher.”

Gary Wagner Chart

As of 4 o’clock Eastern Standard Time, gold futures (August 2017 contract) are trading four dollars (-0.31%) lower at $1267.40 per ounce. Silver is trading under dramatic pressure, breaking below $17 per ounce today. Currently, silver futures (July 2017 contract) is at $16.93 off almost 0$.29 on the day, a net loss of 1.64%.

Noteworthy is current platinum and palladium pricing, which seem to be coming closer and closer to parity. Platinum futures closed at $944.50, up $4.20 on the day. Palladium futures surged today to close at $871.55, a net gain of $15.35 (+1.79%).

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Wishing you as always, good trading,

Disclaimer: The views expressed in this article are those of the author and may not reflect those of Kitco Metals Inc. The author has made every effort to ensure accuracy of information provided; however, neither Kitco Metals Inc. nor the author can guarantee such accuracy. This article is strictly for informational purposes only. It is not a solicitation to make any exchange in precious metal products, commodities, securities or other financial instruments. Kitco Metals Inc. and the author of this article do not accept culpability for losses and/ or damages arising from the use of this publication.

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