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The hawkish tone of the FOMC press release along with confirmation that QE was not going to be extended brought about the expected reaction in precious metals on Wednesday afternoon as the market sold off. Despite the FOMC’s pledge to keep interest rates at historically low levels, the selling in our market continued yesterday as the excellent physical demand was no match for long positions that were being liquidated and speculative short positions that were being initiated and increased.
Our market received another jolt overnight as the Bank of Japan surprised the market when they announced a large increase to their current QE program. The result was a sharp rally in the USD versus the Yen, a big rally in equities and a sharp sell-off in gold, silver and platinum. This morning finds gold trading below support in the low-to-mid $1,180.00s with a short term target of $1,140.00. Beyond that a look at $1,085.00 could be in the cards. Silver continues to see exceptional physical demand this morning, but a test of $15.20 appears to be where we are heading next.
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