The Fed just cut interest rates again. It also cut the rate it pays banks on their excess reserves. 

What does this mean for gold? Well, the 30basis point cut on excess reserves is bigger than the 25basis point cut on the fed funds rate. That could incentivize banks to loan money to the private sector rather than store it at the Fed. 

Institutional money managers wanted to see a half-point cut. That didn’t happen but Jay Powell did talk about potentially restarting QE. 

The bottom line is that current Fed action is mildly inflationary and generally supportive for gold.

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daily gold chart

A sloping channel of support is helping mitigate the downside implications of a head and shoulders top pattern, and a key Stochastics oscillator is oversold. 

Unless gold closes under $1490, the most likely move from here is a test of the $1566 area highs.

Some money managers believe the Fed is on the verge of losing control of interest rates. 

More money printing may be required to regain control. That’s negative for the dollar and the stock market. It’s positive for gold and the yen. 

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This dollar versus yen chart looks terrible. The downtrend is a broadening channel and a small bear wedge is in play.  

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GDX daily chart

While a significant reaction or surge to new highs for gold stocks is possible, the most likely price action now is a sideways market; a range trade for GDX between $26 and $31. 

Tactics? I suggest buying in the $26-$27 area and selling at $30-$31 while awaiting a major breakout above $31 on the weekly chart.

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The price target of the GDX weekly chart rectangle is about $45! 

Gold, silver, and the miners are in a mild and expected pause at weekly chart resistance zones.

Gold is solidly supported by mid-East geopolitical action, dovish central bank action, a peaking US business cycle, and governments that can’t shake their addictions to spending and debt.  For precious metals investors, good times are here, and great times are near!