Federal Reserve Chairwoman Janet Yellen testified before a House Financial Services panel today on the state of the U.S. economy and the Fed's current financial policy. Japan's recent negative interest rate policy has given rise to rumors that the Fed could start lowering interest rates again, but Ms.Yellen dispelled these rumors by saying: "I do not expect the FOMC is going to be soon in the situation where it's necessary to cut rates." Interestingly she also commented that the central bank has not completely researched whether or not negative interest rates would be legal. It seems that for now the Fed is "staying the course" with its plan of gradual rate hikes although, as always, monetary policy will be determined by any changing economic data. As Ms. Yellen states: "Monetary policy is by no means on a preset course."
Yellen's somewhat hawkish comments may have boosted the dollar which helped kick down precious metal prices today. We were expecting a sharp correction in gold and silver and this may be the start of it. This correction may be very brief (2-3 days) so we need to be ready to cover our short position in gold and possibly reverse to the long side by early next week. Stay tuned for updates. Holding my short position in gold but still out of silver.