Fed Minutes Seemed Dovish But...
(Kitco News) - The markets reacted to the FOMC minutes from January thatwere released yesterday. At first, the markets saw the minutes as dovish andboth the metals and equity markets shot higher. Then the market realized thatthe minutes were from before the higher inflationdata that was released in February and the Trump tax cut. The market assessedthat had this data been considered, the Fedwould have been much more hawkish and the markets reversed with momentum. Wecontinue to remain skeptical that the Fed will be as aggressive as the marketassumes, with the risks associated with higher rates. The wealth effect of theFed's accommodation, which is evident in both the equity and housing markets, will be seriously undermined. You can argue thatboth markets are in a bubble, but we believe the Fed will tread veryconservatively in hiking rates and may allow inflation to prove hotter beforepulling triggers. Gold moved to our major support line of $1,322 and must holdthis level from a technical perspective. A break here suggests $1,307. Worth along trade here, with a tight stop at $1,317.
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