Gold Prices Melt Further After Fed Statement

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Gold prices continued melting Wednesday after the Federal Open Market Committee said nothing new in sticking with its easy monetary policy.

Spot gold prices fell 0.35% to $1702.70 an ounce. PowerShares DB U.S. Dollar Index Bullish ( UUP ), measuring the greenback against a basket of major foreign currencies, was unchanged at 21.91.

"Any move below $1,700 an ounce for gold will be temporary and remains an excellent buying opportunity," said Peter Spina, president of GoldSeek.com. "Physical demand remains very strong globally, and the gold price correction is a reflection of profit-taking from funds and investors after nearly a $300 move over the past months."

He expects gold to rebound as short sellers, who profit from falling prices, close their positions by buying back their positions.

"There were huge short positions in gold taken on the run-up to $1,800 and now being unwound," Spina said.

Joe Foster, portfolio manager of Van Eck International Investors Gold , also thinks the weakness offers a chance to buy.

"Uncertainty around the presidential election, fiscal cliff, Fed policies, and ongoing sovereign debt problems in Europe should be supportive of gold," he said.

SPDR Gold Shares ( GLD ), tracking a 10th of an ounce of bullion, slipped 0.29% to 164.94 -- a seven-week low. It broke below its 50-day moving average Tuesday and followed through with more weakness. It has a mediocre IBD Relative Strength Rating of 49 and C Accumulation-Distribution Rating, on an A to E scale. Institutional buying and selling is about even.

Market Vectors Gold Miners ETF ( GDX ) dropped 1.63% to 50.13 -- a six-week low. It broke below its 50-day line for the first time since mid-August. The next level of price support is at the 200-day moving average at 48.63, down 3% from its current price. It has a moderately strong IBD Relative Strength Rating of 71 and a B- Accumulation-Distribution Rating. It's outperforming 71% of the market, and institutions are buying more shares than selling.

Silver Prices Find Support

Spot silver prices ticked up 0.19% to $31.83 an ounce.

IShares Silver Trust ( SLV ) rose 0.26% to 30.76. It's Relative Strength Rating of 58 is slightly stronger than gold. It has middle-of-the-road Accumulation-Distribution Rating of C, which shows institutional buying and selling are about even.

Global X Silver Miners ETF ( SIL ) fell 0.99% to 23.89. It's still trading above its 50-day average, which means its uptrend remains intact. It also sports a strong IBD Relative Strength Rating of 86 and B+ for Accumulation-Distribution. That means it's outperforming 86% of the market and institutions are heavily buying more shares than selling.

What's Next For The Fed

The Fed next meets Dec. 11 and 12 -- it's first after the election.

"If President Obama wins re-election, the Fed is expected to maintain its current accommodative policy course," IHS Global Insight U.S. Economist Paul Edelstein wrote. "If Bernanke steps down as chairman in early 2014, he will likely be replaced by someone with a similar philosophy about monetary policy."

"If Romney wins, the Fed is still expected to maintain its current policy stance for the remainder of this year and 2013," Edelstein added. "Romney is expected to nominate a more hawkish Fed chairman for 2014 who could take monetary policy in a less accommodative direction. If so, markets, after the election, might begin to find the Fed's intention to keep the fed funds rate low beyond 2013 less credible."

Follow Trang Ho on Twitter @TrangHoETFs .



The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.



This article appears in: Investing , ETFs

Referenced Stocks: GDX , GLD , SIL , SLV , UUP

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