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Gold – Decision Time After U.S. Fed Rate Hike

The U.S. Fed decided to increase interest rates another 0.25 pct. That is the 3d hike in 6 months after the ones in March and last December.

According to Bloomberg, policy makers maintained their outlook for one more hike in 2017 and set out some details for how they intend to shrink their $4.5 trillion balance sheet this year. “In a press conference after the decision was announced, Fed Chair Janet Yellen said the unwinding plan could be put into effect “relatively soon” if the economy evolves as the central bank expects.”

Now that happened exactly at a moment in time when gold arrived at a critical level, i.e. the apex of the triangle pattern on its chart.

What this means in plain simple terms: it is decicion time.

We are forecasting for several weeks now that gold would have to choose a direction:

Visibly, it is not an easy decision for gold to choose a direction. It really can go both directions from here. The key question is: what will Yields be doing. If Yields go strongly higher from here, it will be very bearish for gold.

The best thing to do now is to let the market do its work. It is important to monitor closely the trends in leading stock indexes (risk indicator), Yields and gold, because all those markets are influencing each other, a phenomen we tend to call ‘intermarket dynamics’. The point is all this is to identify which market will start the strongest trend, either up or down, and which other market will be influenced.

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