Today’s action by the Fed is showing that they will defeat deflation at any cost. The market response was incredible. Gold shot up like a rocket and the USD took a swan dive off the cliff. Investors in my opinion are wise to accumulate gold on weakness over the next year to hedge their portfolios against inflation and widespread currency debasement. The central banks around the world are undertaking huge levels of quantitative easing which will lead to money supply expansion. Can you say inflation?
This afternoon the technical action in gold completely erases that which transpired before the Fed announcement. Now the big question is if gold can sustain a footing above the $930 level. If it can, then it has a very good shot at $960 near term. That level is what will need to be taken out in order to challenge $1000 mark yet again. Remember my 12 month horizon for the POG is 1,500.
The Gold price has been firmly held back below the $930 mark by the gold bullion short sellers last week and needless to say another mounted attack could be expected in the next day or two. Gold will find support at $900, then $883. Technicals are slowly turning back positive for gold but the key area remains the $930 mark.
Silver is battling to breach its 200 dma to the upside and is caught now between its own 50 dma and 200 dma. Support seems to be right at the $12.50 mark, then we have $12.24. Technicals are slowly turning positive also for silver but I would like to see Silver taking out its 200 dma to the upside first before a major BUY could be issued.
