Fed Gives Markets Heartburn
Kitco Commentaries | Opinions, Ideas and Markets Talk
Featuring views and opinions written by market professionals, not staff journalists.
What were supposed to be benign minutes from the FOMC caused a meltdown in equities on Wednesday. In the initial reaction to an overly dovish Fed, markets soared higher, pushing the Dow up almost 300 points. The jubilation for more free money was quickly met with fear and a market meltdown, with the Dow closing down almost 200
On the news, the dollar crumbled, and gold rallied along with the bonds before dramatically reversing along with equities. Gold continues to struggle and give ground as it looks to test the $1,300 level. However, it would be no surprise to see gold rally from $1,324 today for a short-term bounce.
We expect a small bounce in gold but expect the metal to stay under pressure until the $1,300 level is met. The Fed, which can’t seem to get out of the way, will continue to cause heartburn in all markets because they are running out of tricks to manipulate rates. The key to watch is the dollar -- the Fed’s last hope before losing total control. They will be the black swan.