• Firstly, that supply chain bottlenecks and input shortages may not be solved quickly. In which case these factors could be putting upward pressure on prices beyond this year. The significance is that the FED may be a little more patient on inflation rising.
• Secondly was the reaction by the markets to this sentence: ‘ a number of participants suggested if the economy continued to make rapid progress towards the Committee’s goals, it might be appropriate at some point in upcoming meetings to begin discussing plan for adjusting the pace of asset purchases’ . Now this is very self evident. Of course at some point in the future it will be relevant. It is normally a filler line to the minutes. However, it send US 10 years flying high and the USDJPY higher with it.

This of course sent gold lower. However, crucially the $1860 level held and the short term upside bias remains in place technically. However, it tells you how jittery the market it to tapering. To even to begin to begin to think about them is enough to have that kind of reaction

In 2013 when tapering was announced by the then chair Bernanke US 10 year yields.

The takeaway

So with any surprise taper moves from the Fed the trade is buy USDJPY sell gold. The market is sensitive to tapering and the moves are likely to be accented.