Gold turns moderately south, Fed content to let the tincture of time do its work

Gold turns moderately south, Fed content to let the tincture of time do its work by Michael J Kosares for USA Gold

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Gold took a moderate turn to the south in the aftermath of an uneventful Fed meeting and press conference. The markets, it seems, were hoping for a pleasant surprise but got more of the same instead. Gold is down $17 at $1945.  Silver is down 37¢ at $26.88. In the end, what matters most is the trend in Fed policy and how it is manifesting itself in the numbers. Today’s Charts of the Day are instructive in that regard [Please see below.]. The Federal Reserve Open Market Committee, Chairman Powell tells us, remains fully committed to staying the course on interest rates and its bond market purchases. We have begun to see some direct inflationary results from that policy. Consumer prices, we should remember, are up 1.6% over the last three months. After all is said and done, the FOMC appears content, at least for now, to let the tincture of time do its work.

It is with those policies in mind that Bloomberg commodity strategist Mike McGlone sees gold as stronger now than at the outset of the 2001-2011 leg in the bull market. He sees the yellow metal as gathering itself for a “rhyming rally” in the years ahead that could “nudge gold to $4,000 an ounce in 2023.” In a recent post at his Twitter account, he goes even further saying gold is “set for $7000 per ounce by 2025 if trends stay friendly.” He concludes that “rising gold prices despite declining managed-money net-longs and an advancing dollar, are a sign of the strengthening foundation under the metal. Less speculation vs. more organic demand forces are at play for the store of value, which indicates a healthy bull market.”

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