The SPDR Gold Shares (NYSEARCA:GLD) and the iShares Silver Trust (NYSEARCA:SLV) are both trading slightly lower this morning. These two precious metals will usually trade inverse to the U.S. Dollar, therefore, traders should follow the dollar closely. Short term traders can watch for intra-day support on the GLD around the $167.00, and $166.00 levels.
Nearly everyday since December the media reports how good things are getting in the economy. This report was better than expected, that report is better than expected and everyone is working again. While the economy might be healing in some way investors must ask themselves why the Federal Reserve is continuing to promote low rates until late 2014.
At this time, gold and the major stock market indexes are synonymous. When gold rallies higher the major stock market indexes seem to rally higher as well. Gold is signaling to investors that inflation is being created by the central banks. As we all know by now, when there is inflation the major stock market indexes will react and trade higher.
Every trader in the world follows gold and they should. When gold rallies, or bounces higher it will usually signal that inflation is being pumped into the stock market. The opposite is true when gold declines and sells off, it will signal that the stock market indexes are deflating and will trade lower.
This afternoon, the FOMC will announce there interest rate policy and make a statement about the economy. Most traders and investors are eagerly awaiting the for the central banks action. At this time, many trader and investors are expecting the Federal Reserve to implement its Operation Twist program. Other investors are expecting the Fed to announce another quantitative easing program.