Hard to get excited, especially after the relentless smashings, but gold & silver are reacting favorably to the FOMC statement. Here’s an update…
Gold & silver experienced an initial pop on the release of today’s FOMC Statement:
As expected by the markets, the Fed pulled off no shocker and held rates steady at the same range they’ve been at since March.
Here’s coverage of the FOMC decision, via Bloomberg:
Federal Reserve officials left interest rates unchanged, acknowledging inflation is close to target without indicating any intention to veer from their gradual path of interest-rate increases.
“Inflation on a 12-month basis is expected to run near the committee’s symmetric 2 percent objective over the medium term,” the policy-setting Federal Open Market Committee said in a statement Wednesday in Washington. “The committee expects that economic conditions will evolve in a manner that will warrant further gradual increases in the federal funds rate.”
Officials may have signaled their willingness to allow inflation to exceed their 2 percent goal somewhat by adding a reference to the “symmetric” nature of their target.
The FOMC also noted the weakness in growth in the first quarter, removing a reference in the in March statement that the economic outlook had “strengthened in recent months.” They balanced that out by noting strong growth in business investment.
U.S. economic growth cooled in the first quarter to an annualized pace of 2.3 percent after averaging higher than 3 percent in the previous three quarters.
The decision to maintain the federal funds target range at 1.5 percent to 1.75 percent was a unanimous 8-0. This FOMC meeting won’t be followed by a press conference.
The Fed’s commentary is unlikely to change investor expectations that policy makers will raise interest rates for the second time this year when they re-convene in June.
Officials left unchanged their view that near-term risks to the economic outlook appeared “roughly balanced.” That suggests policy makers are not ready to steepen dramatically the path they’ve projected for slowly raising rates.
The Fed lifted its benchmark rate three times last year — while also beginning to slowly trim its balance sheet. Officials indicated in March they expect a total of three or four hikes in 2018.
Here’s the Fed Statement in it’s entirety, changes highlighted in red, courtesy of Zero Hedge:
According to the CME Group, the probability is 100% that the Fed hikes in June:
Not only is it a 100% probability that there will be a hike, but of that percentage, there is a near 5% probability that the hike will be 50 basis points (as opposed to the 25 basis points the Fed has hiked when hiking since December 2015).
Thirty minutes in, and so far so good. Gold & silver seem to be consolidating here:
Let’s see if gold can get above $1315, and we’ll see if silver can hold on to gains above $16.50.
Remember – Rate hikes are good for gold & silver and no rate hikes are good for gold & silver.
Nothing fundamentally has changed.
But we’re not out of the clear yet as we have what will probably be billed as “the most important Jobs Report ever” on Friday.
And just for good cartel measure, later on that day we have outgoing NY Fed Head Dudley flapping his pie-hole to jawbone the “markets”.
– Half Dollar
About the Author
U.S. Army Iraq War Combat Veteran Paul “Half Dollar” Eberhart has an AS in Information Systems and Security from Western Technical College and a BA in Spanish from The University of North Carolina at Chapel Hill. Paul dived into gold & silver in 2009 as a natural progression from the prepper community. He is self-studied in the field of economics, an active amateur trader, and a Silver Bug at heart.