Fed chair Jerome Powell sent markets into a spin overnight, by signaling they still expect three interest rate cuts in 2024, despite signs inflation is persisting at higher-than-expected levels. Gold jumped out of the gates into fresh all-time highs above $2,200 per oz in USD terms.
Officials kept US interest rates on hold for now, with new quarterly projections showing forecasts for stronger growth and inflation above the 2 per cent target persisting into 2025. Speaking at a news conference, the Fed chair made a comment that sent gold through all time highs:
“We’re in a situation where if we ease too much or too soon, we could see inflation come back. And if we ease too late, we could see unnecessary harm to employment.”
With the Fed in a bit of a bind it leads to a great deal of uncertainty and a lack of confidence in their ability to manage the inflation problem effectively. Hence the rally in gold and silver prices.
Gold in $USD
Markets across the board had a risk-on rally with Bitcoin recovering off it’s recent pullback, US short-term bonds moved higher and the S&P 500 also broke out into new highs, up 0.9%. VIX stock market volatility index was smashed lower by 5.6% on the day.
S&P 500
Despite the improvement in the AUD/USD exchange rate, gold in AUD traded through all times highs also, reaching $3,333 at the time of writing. Silver jumped to $39 AUD per oz.
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