Gold and the Fed

We have been fairly optimistic about gold prices over the next year or so. Nevertheless, the latest rise in gold prices from $1280/ounce on May 29 to $1342 as of June 7 (4.8%) seems to be based on unsound factors and there is a good chance that these gains prove fleeting in the near-term. Specifically, markets are dramatically overreacting to hints that the FOMC may soon start cutting interest rates.