The Federal Open Market Committee just concluded their March meeting, and as expected, investors were waiting on pins and needles in anticipation of Janet Yellen’s press conference with the Fed’s guidance. While at times it can be difficult to decipher the tea leaves, the overall sentiment of the Fed was a bit dovish, implying that potential rate hikes weren’t imminent and that deflation no longer appears to be a major concern. However, the word “patient” was dropped from the Fed’s guidance, which means that the Fed could hike rates sooner than expected.
The market responded favorably to the press conference with a surge in the Dow and in most commodities, including gold and silver. In general, a loose monetary policy is conducive to a strong performing stock and gold market, but the Fed also needs to be concerned with the threat of inflation caused from artificially low interest rates. Eventually the Fed will be required to tighten interest rates to stave off inflation, which is typically when stock market bubbles pop. Many experts have recently expressed concern with stock market valuations, so it’s possible that we’re close to a top in the stock market.
The surge 2% and 3% increase in the price of gold and silver, respectively, has caused a relatively complacent market to awaken. We’re starting to see renewed interest from folks who have been waiting for gold and silver to break out from its narrow trading range. It’s possible to know if the trend will continue, but so far, gold and silver have seen their best daily performance in quite some time.
Be sure to check in a regular basis for the most recent commentary affecting the gold, silver and coin markets.