What Will Fed Decision Do To Gold Prices?
Today is the big day which apparently everyone is waiting for. How will the Fed unwind the balance sheet? The facts are simple. They don’t have to unwind; they can take the bonds to maturity. The only reason for the Fed to unwind would be to create a backdoor rate hike by liquidating bonds in the open market. Lower bond futures create higher interest rates.
Gold held up well on Tuesday and made a low at $1,308 and a high of $1,315, closing the day at $1,314. The announcement would most likely have a positive effect on the price of the metals. The markets appear to have already priced in the worst and gold has a better chance of rallying.
Markets have a way of pricing in news long before the actual news comes out, and we will assume this is the case for the metals. The pattern suggests there is more upside and the selling is over for now.