Markets Pull Back to Kick Off the Week


On Wednesday, the Federal Reserve concludes its 2-day meeting, which should be followed by a 50-basis point rate hike. 

  • Gold markets have fallen a bit during the trading session on Monday to show signs of hesitation, and this week will feature a significant amount of noise.
  • The CPI numbers come out of the United States on Tuesday, which of course will be paid close attention to by traders around the world.
  • Inflation has been a major driver of asset pricing for a while, and I do not expect this week to be any different.

On Wednesday, the Federal Reserve concludes its 2-day meeting, which should be followed by a 50-basis point rate hike. However, it will be the statement that accompanies the rate hike and of course, the press conference afterward that most people will be paying attention to. Furthermore, then we have the European Central Bank with its announcement on Thursday, so there should be plenty of reasons to think that we should see volatility in the interest rate market, which of course will translate to volatility in gold.

Traders To Avoid this Market

Regardless of all of that, the gold market has been a bit overdone as of late, and to pull back from a major resistance barrier after reaching it rather quickly is not a huge surprise. At this point, the real question is going to be whether the market has enough support underneath to turn things around, or if we will just simply plunge from here. I suspect gold has further to go, but you could make an argument for a rising wedge. If we were to fulfill that potential technical indication, the market could drop down to the 50-Day EMA.

Keep in mind that next week, the volume will be dropping off precipitously as traders around the world focus on holiday is not so much on trading. It’s been a long year for a lot of these traders, so it will more likely than not be a welcome relief. This means that gold markets could either be dead and doing nothing, or headlines could cause extraordinarily volatile moves. It is because of this that a lot of traders will simply avoid the market for the last couple of weeks of the year. The closer we get to New Year’s Eve, the more likely we are to see the market simply drift off into oblivion as a lack of momentum takes over.


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