Fed Does Little To Help The Metals

Washington (May 3)  On Wednesday, Fed officials concluded their two-day meeting on interest rates and as is their way, they did nothing, focusing on the equity market as the only asset class that matters. They should have raised rates, but with their fear of the bubble they built, they remained mute.

Gold ended with a loss Wednesday, making a new two-month low. Gold and silver have rallied overnight. Silver held the key level of support at $16.20, while gold is flirting with the key level of $1,310. If $1,310 fails to hold, gold is headed to $1,280; like a great horse race, gold could go either way from here.

The biggest problem for gold is each rally attempt is weaker than the one before. Gold could hold here but the most likely scenario is gold breaks down to $1,280, while silver holds or rallies, narrowing the gold/silver ratio that is now at 79-1

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