FOMC Minutes Spooks Gold Bulls

The release of the FOMC minutes this afternoon, contrary to my expectations, did contain segments that seemed to be a surprise to the market. The tenor of those remarks leaned heavily in the direction of hawkishness and that is what gold sharply lower. It even dented the euphoria in the US equity markets as the S&P 500 initially shrugged off the comments, only to then weaken further as the reste of the session wore on.

The big beneficiary of this hawkish tone was the US Dollar, which in conjunction with speculation that the ECB will move to negative interest rates, soared against the Euro which seemed to fall into an abyss.

All in all, there was quite a bit of commotion across many of the major markets including the bonds which also saw more selling pressure. The all-important yield on the Ten Year Treasury note hit a high of 2.795% today.

I would keep a close eye on that as I feel very strongly that if this thing starts grinding back up towards the 3% level once again, we will be treated to a cacophony of noises coming out of various Fed governors, all of them extolling the virtues of continued QE in full force and warning of the fragile nature of the economic "recovery".

Before getting into gold, I have to make a comment about silver. Losing chart support down between $20.25 - $20.00 has inflicted some heavy chart damage. Barring some sort of news that can be construed as favoring inflation, momentum is to the downside with $19.20 - $19.10 as the next target region.

Moving to gold - I wanted to illustrate something to those who are perennially bullish gold. Notice where the greatest volume in gold has been recently - Yes, on DOWNSIDE MOVES. The only exception to this was the day on which Janet Yellen's testimony statement was released in which we learned ( as if we did not already know this ) Ms. Yellen was extremely dovish. That spooked a short covering rally but as with all recent rallies in gold, it was merely viewed as a selling opportunity.

More later ....