by David Brady
We got the anticipated pullback in Gold right on schedule the night before the FOMC meeting on Wednesday. It dropped from a high of 1975 to support at 1900. Given Silver’s dramatic outperformance relative to Gold, it was no surprise that the dump in Silver was far more precipitous. Silver fell ~15% between 10pm Tuesday and 3am Wednesday morning. That’s equivalent to a drop of ~500 points in the S&P from 3200 to 2700, “in just five hours”. Black Monday type moves.
While the pullback played out as expected, with Gold breaking its 2011 peak and then falling back, the key question is whether or not we drop even further or are we already done on the downside and heading even higher?
The FOMC meeting yesterday was a big nothing-burger. The Fed extended its numerous facilities to the end of the year—no surprise there—and said that they stood ready to increase liquidity depending on how the coronavirus develops and its effect on the economy.