I will be the first to admit it, but I did not think the Fed would actually announce QE on Thursday at 12:30pm EST. The markets were prepared for it and they had been disappointed so many times in the past year that it only seemed right that the announcement would come when it was least expected. Since everyone else had announced QE it only made sense that the Fed would hold off one last time to play goalie in case of a global meltdown.
Well, it may just be that, in fact, that is what Thursday’s real announcement was: an admission that the situation is much worse than the headlines let on and that QE as a last resort needed to happen now and not after the election. We’ll soon find out.
There were shenanigans in the markets in the 15 minutes leading up to the announcement with Gold (AMEX:GLD) getting whacked $25 in under a minute down to $1706, the Euro (AMEX:FXE) being pushed back below $1.29 and oil pushed lower as well. Simply put, it was a reset button, attenuating those markets and flushing some traders before the big moment.
Once it happened, Gold took off and hit $1747 before pushing through the 1% barrier to the 2% barrier at $1768, which is where it closed on the COMEX. The fireworks were over for the afternoon as the capping action started and Gold traded sideways for the rest of the afternoon. Silver (AMEX:SLV) traded similarly closing on the Globex at $34.72 per ounce on the December contract.
The $1765 level in Gold is extremely important technically and when it is breached decisively on a weekly closing basis that will be a confirmatory signal that the next big leg in the Gold bull market will have started. That close could very easily come tomorrow.
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