puke The bottom line is this week's Fed-sparked gold-futures purge was ridiculous and unsustainable. The FOMC didn't warn about QE tapering or imminent rate hikes, maintaining its $120b of monthly bond monetizations and ZIRP indefinitely. Instead just a third of top Fed officials said they expected slightly-higher federal-funds-rate levels way out in 2023! And the Fed chair warned to take dots "with a big grain of salt."
The dot plot is not official, it is not a forecast, and has proven notoriously inaccurate at predicting future FOMC moves. Futures speculators, both on the US-dollar and gold sides, should know better. And that hawkish-dots gold-futures puking erupted from already-low spec-longs levels, so it should quickly exhaust itself. That brutal purge left gold far more bullish, leaving gold-futures traders big room for mean-reversion buying.
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Jun 18, 2021
Adam Hamilton, CPA