Market participants continue to see exaggerated volatility and knee-jerk reactions to the most recent statement from the Federal Reserve. The U.S. dollar has been trading under extreme pressure for over six months. After reaching a high of 104 on the dollar index during the last few months of 2016, it has been consistently moving to lower pricing throughout the first half of this year.

In a statement released by the Federal Reserve today, members said they would, as expected, leave the current Federal Funds rate unchanged.

Gold is currently trading under moderate pressure today, as market participants seek to pull short-term profits. Gold has been in a defined rally mode, which began around July 9^th. From the first week of June to the first week of July, gold prices lost roughly $100 in value before finding support at $1203 per ounce.

It is that time again. The Federal Open Market Committee (FOMC) monthly policy meeting for July is scheduled to begin tomorrow and conclude on Wednesday, when this month’s policy statement will be issued.

Gold is currently trading strongly higher on the day.  As of 4 o’clock EDT, it is at $1254.30. This based on the most active August 2017 futures contract, which is a net change of $8.80 on the day. What jumps out as being a little different than other up day's this week is that today’s upside move is a combination of roughly equal parts weak U.S.

Comments made by European Central Bank President Mario Draghi confirmed what many analysts expected; that the ECB would keep the current interest rate level unchanged. Draghi also vowed that the current policy of asset purchases would continue through the end of the year.

The U.S. dollar has been under siege. In this year alone, the U.S. dollar has lost approximately 9% since the highs reached at the end of 2016. Since then, the dollar index has lost a lot of ground, a little over 2% this month alone. It is this recent dollar weakness that has propped up pricing in both gold and silver.

For the third day in a row, gold closed sharply higher. Gold prices have risen six out of the last seven trading days when considering the incremental upside gains seen early last week. Today’s gains were mostly dollar weakness with a small percentage of the gains attributable to buying.

Last week both gold and silver experienced a key reversal in which the bearish market sentiment was slowly replaced with bullish sentiment. A combination of economic data, as well as the semi annual monetary report and testimony given by the Federal Reserve's Chairwoman Janet Yellen, have been cited as primary causes for the recent price advance.

Just like the canary in a coal mine, the Federal Reserve utilizes economic data to ascertain the current economic environment. More importantly, this data is used to create a forecasting model from which future monetary policies are developed and implemented.