The market was hoping for the FED to signal the end of interest hikes. They did not. As a result, you can expect the US$ to rally short-term becuase higher interest rates will support a higher US$. Of course this is all short-term. I think gold is headed higher but a knee jerk reaction and test of $450 seems reasonable short-term.
the market was hoping,but it did price the 1/4 into the dollar(that's why the dollar is weak this morning).but you are making the arguments that mattered before gold broke out in the worlds currencies.i'm not saying gold won't go down to 450,it's the markets,anything can happen,but everyone is looking at this through the gold/dollar view they have been using-with gold breaking out in Euros,Yen,Francs....it is not just about an inverse to the dollar anymore.you need to look to the world currency markets now,not just the US dollar and our Fed.we are not the center of the universe anymore........
Also, the market has only been "hoping for an end to interest rate hikes" for the last couple weeks due to Katrina. Prior to that, for most of the year the markets seemed pretty sure the Fed was heading for 4%+.
So I think the markets had already priced in this rate hike, and people are trying to place too much emphasis on how severly it will impact dollar and gold.
Just look at RGLD this morning... doing quite nice.... we'll see where we go from here.