FLASH GAGE – As Fed Minutes Released Gold Dips, then Rebounds

Dillon Gage - Flash Market Update

SOME BIG IFS!

Fed minutes just released show that some officials expressed confidence that they can raise rates gradually.

IF data on the labor market and inflation was in line with or stronger than their current expectations or IF the risks of overshooting the committees maximum employment and inflation objectives increased, a rate hike would be in order.

Having said that, they also indicated they had little concern about near-term inflation risks.

I found it very interesting that when the statement first came out, the electronic trading platform for futures gold sold off. Why I believe this occurred was as the words in the beginning of the statement were read by algorithm programs, it indicated higher rates would be on the door step. But as you finish the minutes it seems that there were conflicting comments giving the impression that a rate hike is not a sure thing at the next meeting. So as it all filtered thru gold rallied back four dollars from the low that occurred as the news filtered into the marketplace.

Now at the time of this report gold is virtually unchanged. If I may use a common saying , “GO FIGURE”.

Also as the comments were released the CME FED WATCH TOOL ODDS of a rate hike in March spiked from 18 percent to 26 percent and now after the market has absorbed all the information its back at 18 percent again.

This is why I keep pills for a headache handy in my drawer, because all the conflicting information gives me a migraine.

Do I know if this is exactly what happened? I don’t. But if you follow the pattern I don’t see how anyone can argue or take the other side of this debate. It just seems so obvious.

Some other highlights of the minutes:

  • MANY FED VOTERS SAW ONLY MODEST RISK OF SIGNIFICANT INFLATION
  • MANY FED OFFICIALS SAW HIKE `FAIRLY SOON’ IF ECONOMY ON TRACK
  • MOST FED OFFICIALS JUDGED GRADUAL RATE HIKE PACE APPROPRIATE
  • SOME OFFICIALS SAW DOWNSIDE RISKS FROM SOME POTENTIAL POLICIES
  • FOMC TO START BALANCE SHEET DEBATE AT UPCOMING MEETINGS

Have a wonderful rest of your day.

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