Gold ETFs declined with equity markets today after the Fed signaled it was running out of bullets
Gold ETFs declined slightly today with equity markets as apart of the mid afternoon sell-off surrounding the less than delightful release of the Fed FOMC Minutes. The Fed has indicated that it is “running out of bullets” and that bond buying could stop before the end of the year. Investors typically do not like a lack of Fed intervention, so it is not surprising that equities and gold ETFs declined today after the release of the bad Fed news.
Gold ETFs and the gold spot price typically track with equity prices, however gold ETFs might continue to decline, as a lack of easing would likely bolster the US dollar and strengthen bond prices. Investors seem to flock to gold and gold ETFs however when fear is present (ie, when equities decline or Congress gridlocks itself) so a rise in gold ETFs could be possible within the next few weeks. Although since the Fed has indicated a possibility of less easing before the end of the year, gold ETFs could be facing serious declines, particularly if the state of the US Economy improves.
The gold spot price declined .63% to close at $1674.60 today, while the SPDR Gold Trust ETF (NYSEARCA:GLD) lost a whopping 1.21% today. Both the gold spot price and NYSEARCA:GLD ETF are currently stuck between their 200 Day and 50 Day Moving Averages, so it will likely be very difficult for gold prices to break through into new bullish territory.
Bottom Line: Gold and Gold ETFs declined today alongside equity prices after the Fed released its disheartening anti-easing FOMC minutes. Gold ETFs might continue to decline alongside equity prices, especially if the US Dollar and bond prices rise.