A combination of factors caused the rise in gold to be quite higher today, surpassing the key psychological level of $ 1800 per ounce. The weakness of the dollar was a strong component that contributed about a third of the current strong gains. A disappointing index of U.S.-made purchasing managers raised concerns that the Delta variant of the Covid-19 had slowed the economic recovery in the United States. And that these concerns about the rising rate of infection due to the variant could dramatically cause the Federal Reserve to backtrack on its timeline to begin reducing its monthly purchases of US $ 3 million in assets. and MBS (mortgage securities).
As of 5:15 p.m. of the EST gold futures base, the most active Comex contract in December 2021 was trading at $ 23.60 more, a net increase of 1.33% and is currently set at 1807 , $ 80. At the same time, silver futures are trading at 2.31% or $ 0.533, with the most active Comex contract from September 2021 currently set at $ 23.64. The US dollar index lost 0.518 points (-0.55%) in trading today and is currently set at 92.99. Last week, after hitting last year’s record high, the dollar index softened when it began trading abroad last night.
This brings us to the next key event of the week, which will be the virtual economic symposium released by the Federal Reserve Bank of Kansas City. The symposium, which is normally held in Jackson Hole, Wyoming, will be virtual this year due to the increase in Delta variant cases in the United States. Until recently, members of the Federal Reserve had expressed their conviction that it was time to start reducing their monthly asset purchases. The most aggressive or falconry of Fed members who suggest they begin to shrink later this year and the more loyal or conservative members of the Fed who consider the first quarter or second quarter of 2022 to begin to decline. se.
The recent hawkish behavior of Federal Reserve members peaked just after an extremely strong U.S. Department of Labor job report, which indicated that an additional 943,000 new jobs were added in July. However, the recent invasion of the Covid-19 delta variant in the United States has caused some Fed members to rethink their position on the timeline and the magnitude of the volume reduction.
Rob Kaplan, chairman of the Dallas Federal Reserve Bank last week, said he could “rethink his call for the fed start to reduce $ 100 billion a month and bond purchases if the spread seems to spread.” Delta Coronavirus is slowing economic growth. ”The same goes for Neel Kashkari, chairman of the Federal Reserve Bank of Minneapolis. of the Federal Reserve on when to start slowing the $ 120 billion in monthly bond purchases.
Since the start of the pandemic in 2020, the Federal Reserve has strongly supported the revival of the economy in the United States with an unprecedented amount of capital allocated each month to provide liquidity through the purchase of assets. President Powell has stated on numerous occasions that his timetable for reducing and normalizing rates would constantly depend on data.
Recently, these data have suggested that the Delta variant could stifle or curb the economic resurgence in the United States. And it is these factors that make President Powell’s planned speech for Friday, August 27, so important. The question investors are looking to answer is whether or not the Federal Reserve believes it should reconsider its current reduced timeline, as expressed in the August 18 minutes of the last FOMC meeting.
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