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Fed Day

Wednesday March 19, 2014 08:46

I have a morning tendency that first requires a cup of coffee in the morning, then I check the markets and then I plug in CNN and CNBC for a quick overnight refresher. Not once in the first hour was the Ukraine mentioned. Last week, the story drove gold to within $8 of $1,400 and overnight the significant level of $1,355 was taken out on the downside. This may be a healthy pause in a continued, well-defined bullish technical picture, but, the focus will be on the Fed today and I suspect there will be no “new” news on the tapering policy with forward rate guidance as the focus of traders. “If” this market requires easy money to continue higher, that fact is, in my opinion, assured. The current tapering should continue, buying at a reduction of $10 billion a month and the stimulus will continue throughout the balance of this year, but at that point, rates are still at “zero” from the Fed.  Sounds accommodative to me. The risk to metals in this scenario is the competition to gain yield. It is one of an improving U.S. economy or not that will funnel assets away or into gold, again assuming no serious  geopolitical events.  Gold will need to retake the $1,355 level to reaffirm the upside.  The $1,337 level should provide the next level of downside support.

By Peter Hug
Global Trading Director
Kitco Metals Inc.


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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