The Golden Rule For Next Week

London (Oct 30)  Summary •The Fed will not raise interest rates next week, days ahead of the presidential election.

•Despite all meetings being live meetings, acting now would surprise financial markets.

•Financial market disruption feeds back into the economy, and the Fed must first do no harm.

•Gold and silver investors should rest easy regarding the Fed next week, as a relevant dollar strengthening surprise is highly unlikely.

Let's get one thing straight for gold investors. The Federal Reserve is not going to raise interest rates next week. No matter the chatter since the September Fed meeting, there should be no fear in gold and silver circles about next week's Fed meeting. The golden rule for next week is that the Fed has a responsibility to first do no harm to the economy, and surprising financial markets with an unexpected rate hike days ahead of the anxious presidential election makes no sense, whether every meeting is live or not.

There has been fear and trembling on the street ever since the last meeting of the Federal Open Market Committee (FOMC) in September. Maybe it's no mistake that Halloween is upon us, because gold investors have been thoroughly spooked. You can see some of that in the chart of the SPDR Gold Trust ETF (NYSE: GLD) here. Though, this is also due to factors acting upon the dollar derived from overseas.

A divided Fed vote, with several dissenters, plus the post-meeting appearances of many Fed members have driven expectations for a Fed rate hike to a critical point for the December decision. Currently, Fed funds futures indicate a 68% likelihood of a rate hike in December, and that is probably enough to ensure little market disruption by an actual action. In other words, much of the December hike is probably already priced in at this point. But November is not.

Source: SeekingAlpha