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Fed Minutes Seemed Dovish But...

Commentaries & Views

(Kitco News) - The markets reacted to the FOMC minutes from January that were released yesterday. At first, the markets saw the minutes as dovish and both the metals and equity markets shot higher. Then the market realized that the minutes were from before the higher inflation data that was released in February and the Trump tax cut. The market assessed that had this data been considered, the Fed would have been much more hawkish and the markets reversed with momentum. We continue to remain skeptical that the Fed will be as aggressive as the market assumes, with the risks associated with higher rates. The wealth effect of the Fed’s accommodation, which is evident in both the equity and housing markets, will be seriously undermined. You can argue that both markets are in a bubble, but we believe the Fed will tread very conservatively in hiking rates and may allow inflation to prove hotter before pulling triggers. Gold moved to our major support line of $1,322 and must hold this level from a technical perspective. A break here suggests $1,307. Worth a long trade here, with a tight stop at $1,317.

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 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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