As expected, the Fed raised interest rates yesterday. They opted for the small 0.25% rate hike on the base Fed funds rate.
Traders and investors responded with another round of selling. With few buyers, gold prices dropped 2% during New York trading hours, and another 1% since then.
That’s a 3% result for a 0.25% cause. If only economic stimulus worked that well…
So the second of our two scenarios played out. There was still some selling left in the market. GLD dropped through 110 yesterday and in premarket this morning was sitting just below 108. The question now is how far will gold drop before it finds a bottom?
Anyone who thinks they know the answer is probably writing articles and spouting off on TV right now.
The rest of us, who’ve been burned many times in the past by so-called experts, are letting gold tell us what it wants to do. (And, sadly, writing articles…)
For now, The Gold Enthusiast encourages you to wait for a day or two at least and see if gold shows any signs of a bottom. None in sight at the moment; the chart says there may be some support at 105, then below that at 100. That’d be another almost 7% down.
Not a great time to go long…
Signed, The Gold Enthusiast
DISCLAIMER: When this was written, the author had no positions in any mentioned security, and has no plans to purchase any mentioned security in the next 48 hours.