**Gold Breaks $2220, New All Time High in Asia

Good Evening. Today’s activity was noteworthy and worth a recap. Moreso given the market behavior upon reopen during Asian hours just now.

Contents:

FOMC Meeting Summary
Breakdown of Events
Market Reactions

1- FOMC Meeting Summary

The Fed, in summary communicated:

The inflation spike was “Not terrible” and seasonal.
The Dot plot changes were not indicative of a hawkish trending change
QT will be slowed down (making way for QE if needed we speculate)

2- Breakdown of Events

Rates:

Powell left rates unchanged as was expected at 5.25 to 5.50%

Dot Plot:

Revealed on the surface no real change as 3 rate cuts for 2024 budgeted for. However the back-end for 2025 and further out had their anticipated cuts removed. This is decidedly hawkish and shows an intention to start to lower 2024 rate cuts if need be.

https%3A%2F%2Fsubstack post media.s3.amazonaws.com%2Fpublic%2Fimages%2F323c36f9 ff72 4f85 a07d

Press conference:

If Powell was hawkish in his dot plot, he was the opposite of the in his press conference.

He noted the recent inflation resurgence and implied much of that may have merely been seasonal

“There’s reason to think that there could be seasonal effects there.

When asked if the dot plot changes were the start of a trend. His response indicated they were not.

Next, when asked about the Pace of QT in lowering Fed Balance sheet holdings, Powell said they would slow offloading Treasuries and other bonds.

The general sense of the committee is that it’ll be appropriate to slow the pace of runoff fairly soon, consistent with the plans we previously issued.”

Thats the whole story. Markets took off..

3- Market Reactions

If the reaction was muted at 2pm upon the decision announcement, the reaction to the press conference was anything but muted.

Doves took all the ball and ran with it. All markets behaved as described above. Muted but slightly bullishly, which was a little confusing at first. But once the press conference got going, It was apparent that the outcome was known to smart money.

Silver Rocketed to $25.63 up almost 3% stealing the limelight from Gold….