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Is Tapering Bad for Gold, or Just the Threat of Tapering?

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Gold's recent drop may have overly discounted a less active Fed.

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The following are the latest daily summaries of my ongoing intraday coverage, providing context to interpret price action. Any prices listed are for a contract's current "front month." Their direction tends to correlate with any ETFs listed for each.

Today's Highlight: The FOMC taper announcement triggered substantial volatility as opinions flipped back and forth over its meaning, and prices flipped back and forth over relevant levels.

Dollar Basket
Mar Contract DX; (NYSEARCA:UUP), (NYSEARCA:UDN)
Wednesday morning's sideways ranging reacted sharply to the FOMC news. Ultimately, little has changed, as the sideways ranging continues.

Eurodollar
Mar Contract EC; (NYSEARCA:FXE)
Wednesday's FOMC news triggered a sharp break below the recent range that was recovered to probe the recent range's upper-end. A fresh high testing 1.3833 remains likely.

Gold
Feb Contract GC; (NYSEARCA:GLD)
Fresh lows down to 1227.00 Wednesday were recovered by a spike up to 1237.00 before the afternoon's FOMC news, which was greeted from above 1232.50 support. A reaction up to 1244.00 still fell back down to probe under 1232.50, still needing to close above at least 1237.00 to begin signaling momentum reversing up.

Silver
Mar Contract SI; (NYSEARCA:SLV)
A bounce retested Tuesday's 20.12 high to within a penny Wednesday morning, peaking pessimistically short, which can be bullish from a contrarian perspective. The FOMC news reaction was very deep, but fully recovered by a probe above the morning's high to suggest the rally is underway.

30-year Treasury
Mar Contract US; (NYSEARCA:TLT)
Wednesday morning's gap back under the ongoing 129-16 sell signal didn't extend down to fresh lows, and probed back up above the signal just before the afternoon's FOMC news. Its reaction down to 128-13 was recovered to test 129-16 again.

Crude Oil
Jan Contract CL; (NYSEARCA:USO)
Wednesday morning's gap back under the ongoing 129-16 sell signal didn't extend down to fresh lows, and probed back up above the signal just before the afternoon's FOMC news. Its reaction down to 128-13 was recovered to test 129-16 again.

Natural Gas
Jan Contract NG; (NYSEARCA:UNG), (NYSEARCA:UNL)
Tuesday's retest of Monday's highs up to 4.32 didn't extend higher Wednesday ahead of the FOMC news or Thursday's EIA report. But neither was it rejected, as the session ranged narrowly just under 4.30. A fresh high close would be credible for resuming the rally.

Editor's note: Rod's analytical techniques are designed to efficiently identify targets and turning points for any liquid stock or market in any time frame. He applies his techniques live intraday, primarily to S&P futures, at RodDavid .com.
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No positions in stocks mentioned.
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