FOMC Goes Dovish – Precious Metals Rally

The FOMC / Chair Yellen gave us a dovish report Wednesday afternoon, which brought a rally to our market that has continued as the USD weakened and interest rates moved lower. While it still appears a rate hike is coming this year and some voting members would actually support two hikes this year, it was comments about forward projections that all markets focused on. Specifically, the FOMC has lowered their target federal funds rate in 2016 and 2017, which means they foresee fewer rate hikes over the next two plus years. Chair Yellen made reference in her press conference to international economic conditions adversely affecting U.S. GDP in the coming years, in addition to making comments about inflation levels likely to not meet target levels.

Gold has been the leader of the pack as it has broken through $1,200.00 as many short positions have likely been covered along with a strong pick up in physical demand globally, but strong technical resistance still looms through $1,215.00. The news out of Greece continues to worsen as protestors have taken to the streets, which only adds to their economic woes. The IMF continues to take a hard stand, telling Greek officials that repayment must begin on June 30th, but the meeting that took place yesterday produced no results and another emergency meeting is scheduled for Monday. Today feels like a summer Friday, as volume is surprisingly light, but a gold close above $1,205.00 could set the stage for a break above resistance next week and a run beyond $1,225.00.

Have a good weekend,