Gold prices fell today as investors digested the latest FOMC minutes released last night. These minutes, along with Fed commentary from Jackson Hole, Wyoming on Friday will likely be the biggest data points of the week.
In the release, the Fed appeared more upbeat on the jobs situation, although there did appear to be some disagreement. The Fed also reiterated its current plan of removing stimulus and keeping rates lower than normal for the time being. Overall, the Fed did appear to sound a bit more hawkish than expected. This hawkish tone could potentially mean that a rate hike is soon sooner than most expect. Right now, it appears that many believe the first rate hike will not come until sometime in mid-2015. Investors will likely pay very close attention to a speech being given by Fed Chairwoman Janet Yellen on Friday. Ms. Yellen will be discussing the labor market. Her remarks could potentially reinforce today's hawkish Fed tone.
Looking at the dollar index, it would seem that some do believe a rate hike could potentially come sooner rather than later. The dollar has staged a significant upside breakout this week that could see the greenback move much higher. This dollar upside may potentially keep gold, silver and other dollar denominated commodities on their heels. As it is, gold has once again fallen back below the psychologically important $1300 level, and the bulls seem unable to put together a sustainable rally. Gold could potentially be getting ready for another leg lower in prices that could potentially see the gold bears target the $1240 level.
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