Yesterday’s FOMC statement was viewed as a bit dovish, with the Fed noting the weakness in growth in the first quarter, and signaled their willingness to allow inflation to exceed their 2 percent goal somewhat by adding a reference to the “symmetric” nature of their target – implying they might not be as quick to hike rates going forward.

While the probability of a 25 bp hike in June remained a virtual certainty, the probabilities of additional hikes September and December dropped as follows:

  • Sep from 77.9% to 71.9%
  • Dec from 50.8% to 41%

The yield on the US 10-year bond fell overnight to 2.935%, while the DX moved down to 92.36.

Gold advanced, taking out some stops over yesterday’s $1314 high and Tuesday’s $1316 high on the way to $1318.20 (short covering seen).

Mostly weaker global equities were a tailwind for gold with the NIKKEI closed, the SCI was up 0.6%, European shares were off from 0.1% to 0.2%, and S&P futures were off 0.3%.

Reports that the US was considering taking executive action to restrict some Chinese firms’ ability to sell telecom equipment weighed on stocks just before the NY open (S&P futures to 2617).

News from the World Gold Council that demand declined 7% in Q1 (see news story below) was a headwind for gold and limited its gains.

At 8:30 AM, better than expected reports on US Jobless Claims (211k vs. exp. 225k), and the Trade Balance (-$49B vs. exp. -$50B) outweighed misses on Productivity (0.7% vs. exp. 0.9%) and Unit Labor Costs (2.7% vs. exp. 3.0%).

S&P futures stabilized from the morning selloff (2623), and the 10-year yield moved up to 2.953%.  The DX rebounded to 92.56, and pressed...

Read more from our friends at Gold & Silver