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The recent FOMC minutes are hawkish and negative for the price of gold, but the Fed will remain generally dovish for some time. Last week, the Federal Open Market Committee (FOMC) published minutes from its last meeting in January . They reveal that Fed officials became more optimistic about the economy than they were in December. The main reasons behind the more upbeat economic projection were the progress in vaccinations, the government’s stimulus provided by the Consolidated Appropriations Act 2021, and the expectations of an additional sizable tranche of fiscal support in the pipeline: Most participants expected that the stimulus provided by the passage of the CAA in December, the likelihood of additional fiscal support, and anticipated continued progress in vaccinations would lead to a sizable boost in economic activity.
Powell testified before Congress and reiterated the Fed’s dovish stance, but nevertheless, gold continued to slide.
On Tuesday, Powell testified before the United States Senate Committee on Banking, Housing, and Urban Affairs. He offered no big surprises, so the markets were little changed. But the price of gold ended that day with a slight loss, as the chart below shows – perhaps just because Powell didn’t surprise, and struck a dovish tone.
Anyway, what did the Fed Chair say? In his prepared remarks,
Powell acknowledged the improved outlook for later this year. As I noted in the last edition of the Fundamental Gold Report about the recent FOMC minutes, a more optimistic Fed about the U.S. economy is bad news for gold.
FOMC Minutes Disappoint Gold Bulls fxempire.com - get the latest breaking news, showbiz & celebrity photos, sport news & rumours, viral videos and top stories from fxempire.com Daily Mail and Mail on Sunday newspapers.