Gold Spikes on Dovish Fed

Gold is Goldilocks.. Everything else is not.

Gold spiked up to $1982.30 during Powell’s press conference.

WHAT HAPPENED

• Powell is more dovish

• Stocks, Bonds, The dollar, and Gold reacted in unison to the dovish stance

Silver lead today…

But Gold caught momentum when Powell stepped up…

The Dollar dropped and has just accelerated lower as Powell started speaking…

But stocks are muted in their rally. Perhaps they rallied yesterday, perhaps this is real slowdown/stagflation risk…

Comment:

We believe this might be short lived. Stocks will lead things lower if that is correct, but it will drag gold and silver down. That said: We are in a heavily inflationary environment that will almost definitely resolve in stagflation. Bank failures ensure it. Therefore if gold is dragged down with stocks, Gold is not a short. Stocks may be now in this world.

If the stagflation becomes recession, then we get easing. Gold is Goldilocks.. Everything else is not.

KEY POINTS

1. Powell raised 25 basis points

2. Regarding the “Ongoing phrase”:

   1. They removed it and replaced it with a slightly more dovish statement

   2. "ongoing increases in the target range will be appropriate” removed and replaced with "some additional policy firming may be appropriate"

3. They removed inflation "has eased somewhat" and just left "remains elevated"- signals stalled trend back down

4. Dot plot unchanged- not dovish

5. They added: "The Committee will closely monitor incoming information and assess the implications for monetary policy"- translated: if the bank crisis gets worse, we will back off

Courtesy ZH