Gold Sector Correction – What Happens Next?

The Long Awaited Correction is Underway The gathering of central planners at Jackson Hole was widely expected to bring some clarity regarding the Fed’s policy intentions. This is of course a ridiculous assumption, since these people have not the foggiest idea what they are doing or what they are going to do next. Like all central planners, they are forever groping in the dark.
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Nevertheless, financial markets keep reacting to their words as if they actually meant something – and of course we have to deal with that reaction, regardless of how irrational it is.
As we have mentioned many times during the gold bear market from 2011 to 2015, it was primarily the threat of a rate hike that put pressure on gold and supported the US dollar. We argued that once the Fed finally dared to implement a baby step rate hike, gold would very likely rally in a ‘buy the news’ type response – which indeed happened.
Ms. Yellen’s speech at Jackson Hole (we will post a little post mortem on that gathering of interventionists soon) was still deemed non-committal enough by the markets. Her deputy Stanley Fischer attended the event as well though, and he started mumbling something about rate hikes.

This post was published at Acting-Man on September 1, 2016.