Gold at short term decision point and FOMC commentary by Bill Downey

While there’s a lot going on, let’s put it aside and just focus on the FOMC results in less than an hour.

Deutsche Bank: "If The Fed Stick To Their Script Then The Market Could Be In For A Small Shock"
Submitted by Tyler Durden on 01/28/2015

If the Fed stick to their script then the market could be in for a small shock. Market-based measures of the first Fed hike place it at around the October meeting. This is already one meeting later than was being priced in at the start of the year. After this the second hike is priced in for around March 2016, whilst we entered the year pricing in the second hike for December 2015. So there is room here for volatility as we approach the summer FOMC meetings if the Fed’s message remains unchanged. It has long been our view that the Fed will struggle to hike as soon as it wants to given global growth and inflation issues, however there's no doubt they are keen to pull the trigger so something will have to give at some point. So any evidence either way today will be interesting.

GoldTrends Commentary;

Of more importance (I think) is the US Dollar. Unless they are using it as a financial asset to squeeze everyone ---- OR to give the rest of the globe a chance to devalue?

If not then --- they want the USD lower and now. In fact, it's hilarious to me that it is doing the opposite of what they want and what everyone thought it would do. By trusting my charts ---- I was able to be the one bullish on the USD, and quite frankly, it has been getting stronger not weaker.

I'll go with the scenario that the Fed hasn't got a clue and will try to be as dovish as possible in order to put a lid on the USD.

It has reached the next important resistance in the 96-97 area --- and if they gonna push it down, now is the time to do so (or try).

In any event, I suspect that is what they are focusing on right now ----- because the Currency War is on right now.

A lower dollar would actually help prop up their beloved stock market.

Thus I suspect that the UNDERLYING FACTOR (not what they will say today to the masses) might just be how to stop the US Dollar from going up. Because the implication of course is it will choke the US feeble economic activity and if the US joins in the rest of the global downturn, it has the potential of cascading down into a waterfall event that takes not only the global economy down, but triggers a world wide debt default as the banks panic, and the sovereign debt of nations follow.
In summary, while the FED might not be successful, their best bet is to try and to stop the US dollar from appreciating for the simple reason that it holds the seeds to bringing everything down if it continues to appreciate in the manner that it is doing so.

That would hold up stocks, and would not add to the global downfall that is coming. When the dust settles, the US dollar is going to be blamed for it all anyway.

Unless they are using the US dollar as a financial weapon, or one that allows currencies to devalue, one would think they get real dovish. That would favor a chance for the US dollar to at least begin a meaningful pullback.

One thing for sure, if the US dollar keeps rising there is going to be severe repercussions.

In the end (just before a liquidity squeeze) it doesn't really matter what you do (or what happens) for it causes severe repercussion. Just look at what's coming with oil.

At the moment, the most likely scenario they are thinking is to get a hold of the dollar and stop the rise. It may very well be what propels gold higher into Feb/March. However, should the Fed stand tall and stay with the scenario that higher rates are coming, it could spike most markets lower into the next 24 -48 hours.

Gold Chart
Yesterdays print low at 1272 (our weekly reversal number) held and gold jumped right back to just under 1300.

Now the moving averages and price have all converged right at the lower blue momentum line and await the FOMC statements. Support is that mini red line at around 1280. Under that we 1272 (which was also last weeks low). That’s 1st level support (1272-1280). The next support is the Fibonacci retrace at the 1266 area and 1255 which was the first breakout point of this new uptrend. Thus 1255-1266 is 2nd level support. Finally we have another key Fib price retrace at 1243. The best place to try a trade is the 1243-1255 area. Risk would have to be either 1237 or 1217 for a stop.

For those hungry for entry, then 1255-1266 is your 2nd best level. Any close above the dual black dotted lines (say 1304) would give the bulls favor. In summary, it all comes down to the FED.

Finally, whether gold holds the lower blue trend line or is about to pullback to 1255, odds favor it's going to make a short term push back up to attempt to move higher into mid February. At least that's the odds favored scenario at the moment. Monthly support is the 1222 area.

Finally, it is not out of the question that gold made its low yesterday at 1272. It depends what the Fed says, and what the control boyz do.

	RSS feed		24hGold Mobile
	Gold Data Center		Gold & Silver Converter
	Gold coins on eBay		Silver coins on eBay
	Technical Analysis		Fundamental Analysis