December Gold:  Open= 586.0  High= 594.5   Low=582.5   Close= 590.8   Change: +3.2

The FOMC meeting came and passed today, with some interest in what the Fed would have to say about inflation but largely the market already presumed correctly that interest rates would be unchanged.  The rates were left unchanged and the dialogue also was left relatively unchanged.

Bigger than the Fed decision was the energy inventory report this morning.  Across the board supplies were down and prices popped on this news.  Gold followed behind, reversing earlier losses, and settled back down into a small positive trading range the rest of the session.

OPEC’s production cut was greeted with much skepticism last week and prices took out yearly lows in the December contract on Monday.  However, Saudi Arabia, Iran, and the UAE announced to its clients that supplies would be cut, supporting the OPEC decision with concrete actions.  Also, production from four oil platforms in Nigeria will be off-line as rebels have seized control of three and one more voluntarily shut down for security purposes.  It could be said then that when US supply figures were released this morning and showed draw-downs across the board, the market had some bullish news to rally upon.  Crude oil rallied over $2.00 to settle up above $61.  However, any sustained rally at this time needs to be feed bullish news consistently.

Gold prices remain almost at the whim of energy prices currently.  A more hawkish report from the Fed certainly would have supported a larger rally than the $3 move today.  There’s still no major theme for gold to latch onto at this time, keeping participants away from the market.

Until then, gold will follow energy prices and play off the dollar to a minor extent.  There are reports of renewed physical buying from Asia, which could be supporting the market around $580.  On a technical note, there is the possibility that a head and shoulders bottom formation is starting to appear on the charts.  Keeping upside momentum is a problem however.

Support comes in at $590, $586, $585.  Major support comes in at $580 and $575.  Resistance is seen at $594.5, $595, and $600.  Open interest continues to fall.

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