The FOMC statement was once again almost a carbon copy of the last one. The only noteworthy event worth commenting on is that in addition to the hawkish dissenter Esther George, John Bullard dissented because he felt the Fed’s actions are not dovish enough (he’s worried about ‘inflation being too low’ of all things).

Still, it is the market reaction that counts, and nearly all markets except the dollar reacted rather badly to Ben Bernanke’s news conference – even though it actually contained no news. Treasury yields soared, stocks were whacked, and so was gold. When we last wrote about gold and gold stocks we remarked:

“Unfortunately the HUI index violated the previously highlighted gap support in Tuesday’s trading, which killed the ‘island reversal’ idea (it did however revive the idea that all upside gaps in the index tend to eventually be closed). It was especially worrisome that this happened with gold relatively stable, i.e., the HUI-gold ratio once again went into the ‘wrong’ direction. Per ample experience that is a sign that gold is set to decline further in the short term (we are always open to surprises on that front, but those are rare).

Gold itself is conspicuous by its utter failure to profit from recent weakness in the US dollar. This is a bearish sign as well.”

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