December 20, 2021 – Gold’s price dropped a bit today as investors locked-in profits from the previous week’s move up. Despite this small give back, gold continues to hover around $1,800 per ounce.
The dollar weakened last week on news of the Federal Reserve’s new hawkish policy stance, thus giving a lift to gold. The dollar’s contrary reaction was a result of offsetting fears of a global slowdown related to world governments reaction to the Omicron variant and disbelief that the Fed will, or can, truly follow-through on a tapering and tightening plan. This week will see a slew of official data released related to the economy, including leading economic indicators and core inflation. Traders will be watching these numbers closely for clues as to whether the Fed will be able to hold to their less accomodative roadmap.
Over in the equity markets, all the major averages have broken below key technical levels. Fears of new or more onerous lockdowns from Omicron, a Taper Tantrum, and Senator Manchin’s push back on Build Back Better are blamed for the negative prints.
The specific damage to markets is as follows: The Dow broke below its 100 DMA, S&P below its 50 DMA, Nasdaq below its 100 DMA, and the Russell 2000 sits far below its 200 DMA. With this hit to portfolio valuations, market participants await the usual Fed put, which has consistently come to the market’s rescue for over a decade. Is Jerome coming to the rescue again, as widely expected by those always spared the horrors of experiencing any loss from their speculative activities?