The gold market reacted exactly has I had expected after last weeks FOMC meeting (see commentary below from my last report immediately following the FOMC meeting)...

The August contract reached just shy of the $950 level yesterday, which is reaching a strong level of intial resistance $950-$960 - I would expect a period of consolidation after this recent $60+ rally.  Most of you were aware that I was adamantly stating that gold would trade sideways to lower during the summer doldrums, and since April that stance has treated us very well.  We have been selling options collecting premium throughout that period expecting the wide consolidation phase.  On Wednesday of last week I quickly changed my opinion (after the Fed meeting) covering all short options in anticipation of an increase in volatility and a move higher in gold. 

At this point, as stated, I expect a period of consolidation and retracement after the latest sharp rally.  I have widely stated that Gold's seasonal tendency is to see consolidation from April throughout mid-July, and the Fed meeting likely did nothing more than take gold back to the top end of the wide consolidation range of $860 - $960.  The real question now is will gold break out early or fall back within the range for the next couple weeks. 

Commentary from the last Metals Report immediately following the Fed meeting...

In the midst of my frequently stated opinion that gold will remain sideways to lower during the summer doldrums the Fed (as expected) left short term interest rates unchanged, but failed to make sharp remarks on fighting inflation in the weeks ahead.  The lack of hawkish commentary showed their apparent neglect toward inflation and has left the door wide open for gold to move higher - even in the midst of the summer months. 

Gold has been under pressure for several weeks, and this lax Fed stance on inflation should allow gold to rally.  Most were expecting the Fed to leave rates unchanged, but the expectation was to hear poignant rhetoric on their hawkish view on inflation.  The Fed's lack of poignant comments should allow commodity funds to once again feel comfortable adding to long positions in commodities as it would appear the Fed will leave rates unchanged until much later in the year. 

Expect gold to find a friendly environment for the next several sessions on the back of this news.