Marex Spectron Bullion Thoughts

It is rather remarkable to think that less than a month ago, gold shot up on the back of a missile firing in North Korea and the assorted baggage that came with that. The markets were scared and gold was the major beneficiary. Now here we are, with the price of gold almost fifty dollars lower, but nothing has really changed. Trump is threatening total annihilation of North Korea, to which I am sure Kim Jong Un will have something to say or do. And now in addition to that, the US President is picking another fight, this time with Iran, with inflammatory comments at the UN yesterday. It does indeed seem that the markets have very, very short memories. All the focus at the moment is on the conclusion of the FOMC  meeting today and what the Fed will have to say about balance sheet reduction. I can only surmise that the market is looking for positive signals from the Fed as to the timing of this and if it does happen sooner rather than later, this would be negative for the gold price. However, selling gold in this time of geopolitical instability I think is very short sighted and if gold does dip off below 1300, I would look to buy it. I really do not believe that we have seen the last of the problems with the North Koreans, although in this particular case I would be delighted to be wrong!

So, I have no doubt we will sit through most of today twiddling our thumbs ahead of this evenings Fed announcement (7pm London time). There will be no movement of rates, although of course the press release that goes with the announcement is what is important. This will be scrutinized for commentary on, as I said earlier, balance sheet reduction along with the “dot plot” (don’t ask!), that will give forecasts for inflation, rates and GDP. This will no doubt create turmoil for ten minutes before everyone comes back to their senses and the market goes back to waiting for the next event.