Gold falls as Fed hawks grow bolder

By Colin Twiggs
October 30th, 2015 4:00 p.m. EDT (7:00 a.m. AEDT)

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A quick summary of the Fed's latest FOMC statement released Wednesday:

  • Household spending and business fixed investment increasing at solid rates
  • Housing sector improved further
  • Net exports remain soft
  • Underutilization of labor resources has diminished since early this year
  • Inflation remains below 2%, reflecting low energy prices
  • Risks are balanced
  • Inflation expected to rise gradually toward 2 percent over the medium term.

The hawks grow bolder as hourly manufacturing earnings rise — fueled by solid domestic performance — with net exports the only remaining concern.

Interest Rates and the Dollar

Long-term interest rates found support at 2.0% — the Fed's target inflation rate — with 10-year Treasury yields rallying to test resistance at 2.25 percent. Recovery of 13-week Twiggs Momentum above zero would signal an up-trend.

10-Year Treasury Yields

The Dollar Index is testing resistance at 98. Expectation of higher rates will fuel support for the Dollar. Respect of zero would indicate long-term buying pressure. Breakout above 98 would signal another advance.

Dollar Index


Gold broke medium-term support at $1150/ounce after the latest FOMC statement. Higher interest rates and a stronger Dollar would both weaken demand for gold. Breach warns of a test of the primary level at $1100. A 13-week Twiggs Momentum peak below zero suggests continuation of the primary down-trend.

Spot Gold

* Target calculation: 1200 - ( 1400 - 1200 ) = 1000

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~ George Soros


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