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March 16, 2017, 11:24 a.m. EDT

Gold fever — here’s what will keep the metal hot, post-Fed

Critical information for the U.S. trading day

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By Barbara Kollmeyer, MarketWatch

AFP/Getty Images
Get out of the way

“Thank you, Janet Yellen.”

That’s FXTM market strategist Hussein Sayed, who credits the Fed chief for the cheery mood in markets this morning. A neutral rate hike and a “Goldilocks” U.S. economic view was pushing up several assets Tuesday.

“The market was expecting some upward revisions [from the Fed] and got none, seeing instead a slightly faster pace of rate increases for now, but no change to the eventual destination,” notes Société Générale’s Kit Juckes.

“That has been received as fantastic news by risk assets and higher-yielding currencies, and as poor news for the dollar,” he says.

Investors have also coasted past some other big worries, such as U.S. oil supply and the possibility that Dutch voters might embrace anti-Islam, anti-EU party leader Geert Wilders.

Gold, in particular, is feeling the love this morning, with prices soaring and miner-heavy FTSE 100 /zigman2/quotes/210598409/delayed UK:UKX +0.07%  at a record high. That brings us to our chart of the day from Slope of Hope’s Tim Knight, who gives miners and gold a fresh scrub, post-Fed.

Look below for his chart of precious metal mining company stocks that trade on the Philadelphia Stock Exchange /zigman2/quotes/210598348/realtime XAU +0.57%  .

Focus on the yellow area in this chart. Knight says while it’s hard to say how much higher gold prices will go, that shaded region represents “‘room to roam’ to the upside” for miners.

Slope of Hope

As for what will keep gold and miners going, he advises keeping an eye on the dollar/yen /zigman2/quotes/210561789/realtime/sampled USDJPY -0.0192%  cross. (A weaker dollar generally is good for commodity prices and miners).

“It’s simple. USD/JPY goes down ... then miner bulls profit. Period,” says Knight.

The blogger says he’s playing this via the VanEck Vectors Gold Miners ETF /zigman2/quotes/206399889/composite GDX +0.56%  and Direxion Daily Gold Miners Index Bull 3x Shares /zigman2/quotes/208908392/composite NUGT +1.29%

At the same time, some market watchers were attributing gold’s post-Fed blowout to sell-the-rumor, buy-the-fact action.

Brien Lundin, editor of Gold Newsletter, told MarketWatch that the same such surge was also seen with December 2015 and 2016 rate hikes, spurring “big, multimonth bull runs in gold, silver and mining stocks.”

Check out: Fed rate hikes + low growth = recession, says stock-market strategist

Key market gauges

The Dow /zigman2/quotes/210598065/realtime DJIA +0.13%  , S&P 500 /zigman2/quotes/210599714/realtime SPX +0.24%  and Nasdaq /zigman2/quotes/210598365/realtime COMP +0.92%  have pared back on some gains.

Gold  is up over 2%, and silver’s  up near 3%, while the dollar /zigman2/quotes/210598269/delayed DXY -0.23%  is seeing some pressure. Oil has given up earlier gains.

Read: Retail trader tells how he turned $600 into $100,000

See the Market Snapshot column for the latest action.

The call

Should investors obsess about what crude prices mean for Big Oil? Not right now, say Citi analysts, who think those energy stocks can outperform. That’s even if oil futures spend the next few years rangebound, as Citi expects.

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