Gold Drops 2% as Fed Doves Retreat

Gold is down about 2% today. It’s now at a post-Brexit low. I think this is due to a few things. For one, I think the holdouts against the Fed raising rates in December are starting to give in. The Fed has been a lot more careful about telegraphing their intentions. Remember, there were three dissents at the last meeting.

Gold’s had a pretty strong run since late last year. However, it hasn’t been able to breakout to a new high in several weeks. That could be a bad omen. I also think the good ISM from yesterday is also working in the December Hike camp. The futures market now says there’s a 63% chance of a December hike. I think that’s too low.

Prior to Brexit, gold had been losing momentum and the Brexit vote may have given the gold trade more legs this summer. Prime Minister Theresa May has pledged to go ahead with the Brexit negotiations. Today, the pound touched a 31-year low against the U.S. dollar.

Posted by on October 4th, 2016 at 11:12 am


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