The Goldclub Review

The gold market takes a hit: Powell warns of higher interest rates

Busy week here at GoldClub Direct as we expect some price action! Federal Reserve Chair Jerome Powell issued a stern warning to US lawmakers today, stating that interest rates are likely to be higher than previously anticipated due to stronger-than-expected economic data.

In ‘hawkish’ prepared remarks for a hearing before the Senate Banking Committee, Powell cited a tight labor market, solid consumer spending, manufacturing production, and higher-than-expected inflation data as evidence that the ultimate level of interest rates will be higher than previously thought.

Powell warned that if these strong economic trends persist, the Fed could speed up its rate increases, which could cause further turbulence in the precious metals market. Powell noted the current situation is a combination of supply and demand issues, the war in Ukraine and further unknown resolution. He also acknowledged that getting inflation back down to the Fed’s 2% goal will be a a long and bumpy ride.

It is a good idea to proceed with caution in the current economic climate, as Powell’s warning suggests that the gold market could continue to be volatile in the weeks and months ahead. Markets will continue to monitor the situation as the testimony on U.S. monetary policy to Senate and House committees continues Tuesday and Wednesday.

These initial comments pressured gold prices down, with April Comex gold futures currently trading at $1,820.80, down 1.82% and Silver futures down 4.42% to $20.200 on the day. Solid support still exists for gold at $1,810.35 and the $1,800 price points and silver at 20.25 and $20.  Keep an eye out for any major reversals as the markets continues to digest the latest information.  A great buying opportunity may present itself to those looking to take advantage of the market dip in gold and silver!

While metals, crypto and stocks (S&P currently sitting at 3,997.08, down 1.27%) are all trending lower, predictably the dollar spot index and treasury yields rose higher.

  • The US economy has continued to recover from the pandemic, with strong growth in GDP, employment, and consumer spending, but there are still challenges related to the pandemic, supply chain disruptions, and other factors.
  • Inflation has been higher than expected in recent months, driven by supply chain bottlenecks, strong demand, and other factors, but the Fed expects inflation to moderate over time as these factors ease.
  • The Fed has maintained its accommodative monetary policy stance, with interest rates near zero and asset purchases ongoing, but it is preparing to adjust policy as necessary to achieve its goals of maximum employment and stable prices.
  • The Fed’s outlook for the economy and inflation is still uncertain and there will likely be continued softening in the labor market to achieve 2% inflation.

Looking ahead, all eyes will be on the the Labor Department which is scheduled to release the February U.S. employment situation report Friday, which will include the highly anticipated non-farm payrolls component. Experts predict that the report will reveal an increase of 225,000 jobs, following an impressive rise of 517,000 in the January report.

All Updates and Market info are provided as a third party analysis and do not necessarily reflect the explicit views of GoldClub Direct LLC. and should not be construed as financial advice.