Gold

With the tremendous decline in U.S. equities, it seems quite likely that market participants have been factoring in next week’s FOMC meeting and a more hawkish Federal Reserve. Can the same be said for market participants actively investing or trading in gold or silver?

Except for gold, the remaining precious metals traded on the futures markets had solid gains continuing the precious metals rally. Although gold was the only precious metal to close with modest declines, on closer inspection it was all about dollar strength rather than a lack of buying interest that moved gold lower on the day.

It was a combination of events that resulted in dynamic gains across-the-board in the precious metals markets today. Three primary concerns have elevated the bullish market sentiment that has already been in play in the precious metals markets, today however it seemed as though these concerns were magnified.

A combination of factors stemming from the upcoming FOMC meeting have pressured U.S. equities lower, moved U.S. Treasury Notes and bonds higher, and had a substantial impact on taking the U.S. dollar higher. This month’s FOMC meeting is scheduled to begin one week from today, on January 25, and conclude on the following day.

Gold continues to trade in a range-bound manner, but over the last five weeks, gold prices have gained value during four of those weeks. Although gold has traded lower yesterday and today, ending the week with a moderate gain of 0.6%. For the most part, we have seen gold trade through the eyes of the weekly chart with a succession of higher lows.

Multiple sectors and asset classes in the financial markets came under pressure today as market participants prepare for the real possibility that the Federal Reserve will begin a series of multiple interest rate hikes beginning in March of this year.

Extreme dollar weakness resulted in strong tailwinds which propelled gold to higher pricing today.

While it seemed obvious to most economic analysts as well as everyday citizens that inflationary pressures have been running rampant, out-of-control continuing to spiral to higher levels, the Federal Reserve for too long maintained its stance that rises in inflation were transitory and would quickly subside.

There is extreme duplicity between inflation and gold. Currently, that duplicity is acting as a double-edged sword with both sides honed to razor sharpness. On the one hand, as inflation moves higher, it makes gold a favorable asset to hold in your portfolio. It is considered one of the better inflationary hedges.