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Gold Lower as Fed Ends QE

Gold prices took a dip today as the FOMC ended its quantitative easing program. The Fed did, however, keep its language about keeping short-term rates low for a considerable period of time.

The Fed seemed more upbeat about the economy and did not appear too worried about economic weakness, recent market volatility or low inflation. Of note, the Fed did change its outlook on the labor market and did state that underutilization in labor resources "is gradually diminishing."

Stocks sold off on the news and this knee-jerk reaction is not unexpected. Gold prices falling was not unexpected either as the dollar rose sharply and appears headed back for a test of its recent highs.

Unfortunately for the gold bulls, the market still appears to be lacking any bullish catalyst that could possibly propel a sustainable rally. Low inflation, lower energy prices, a stronger greenback and higher stocks appear to be just too much right now.

Gold may be headed back down for another test of support in the $1183 area. Should this level fail to hold the bears, gold prices could potentially begin another significant leg lower in price that could possibly see $1000 per ounce gold in the coming weeks or months. While gold had become oversold in recent months, perhaps a short covering and relief rally to work out that oversold condition has already come and gone.

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30 Oct 2014 | Categories: Gold

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