The gold market was able to resist a fairly optimistic Federal monetary policy statement, but was unable to hold its daily gains after what appeared to be hawkish comments from the Fed Chair Janet Yellen.
While gold has been steadily giving up its early morning gains as the market digested the latest Federal Reserve statement and economic projections, the yellow metal attracted renewed selling pressure as Yellen shrugged off weak inflation concerns.
…While acknowledging that prices pressures are currently weaker than expected, Yellen said that conditions are in place for inflation to eventually pick up.
PG View: I’m not convinced that inflation is really on the verge of picking up, but even if it does, that would be bullish for gold. At this point, I think the market is just a little confused. Those that bought on expectations of a more dovish Fed are moving to the sidelines, it there is indeed evidence of renewed inflation expectations, those investors will be buyers as well.