The Fed left the rates unchanged, just like the markets have been expecting. If it was the only thing that was announced and if there was no changes, we would view today’s move higher as very temporary and likely open a short position in the precious metals sector.

However, we heard something new - the Fed now signals two rate hikes in 2016 instead of four. That’s a bullish piece of information, so today’s move higher in gold may (!) be followed by a few additional daily upswings.

The key word is “may” as so many factors point to lower prices in the coming weeks (thus any rally from here is likely to be short-lived) and the above does not change the medium-term outlook, which remains bearish.

The point is that based on the information that we have right now it still seems that opening short positions at this time is not yet justified from the risk / reward perspective (it appears too risky in light of the good possibility of seeing a short-term move higher in the precious metals sector).

The most likely outcome at this time (which could change, but if it does, we’ll let you know) is that we’ll see an additional short-term rally in metals and miners, which is followed by a major decline.

At this time it’s a tough call to say how high will gold move, but the previous March high and $1,328 are not impossible, with $1,263 serving as an additional target (61.8% Fibonacci retracement based on the March decline and at the same time the February high). We’ll keep monitoring the market for bearish confirmations (or invalidations) and we’ll keep you informed through our alerts.

Thank you.

Sincerely,
Przemyslaw Radomski, CFA
Founder, Editor-in-chief

Gold & Silver Trading Alerts
Forex Trading Alerts
Oil Investment Updates
Oil Trading Alerts