The price of gold increased last week as Jerome Powell, the chairman of the Federal Reserve, gave his virtual speech at the Jackson Hole symposium. By noon, spot gold had risen slightly above 1%, reaching $1,811.50 per ounce, exceeding the $1,800 level for the second time in the week. In New York, U.S. gold futures were trading at $1,811.61 per ounce, a 0.9% increase.
In his speech, Powell stated that the economy has reached a point where it doesn’t need as much policy support, adding that the Fed would begin to decrease its monthly bond purchases before the year’s end. However, this would only be the case if economic progress continues. Based on this statement, as well as others from central bank officials, many expect a tapering announcement by late September.
This comes after an increase in processes associated with shortages and strained supply chains had increased the prospect of an early decrease in stimulus, which had in turn cast a shadow over the precious metals market — and gold in particular.
At the same time of the precious metal’s increase, the value of the dollar sank as Powell reiterated his view that the present spikes in price were transitory. Major stock indexes also hit record highs while government bond yields declined.
Richard Clarida, the Fed’s vice chairman, noted that he agreed with Powell’s remarks, adding that he expected tapering to begin this year, as long as labor gains continue. However, he asserted that no specific date for when the process would commence had been set.
In addition to this, Powell stated that the central bank wasn’t in a hurry to start raising interest rates, noting that the pace and timing of the looming decrease in asset purchases wasn’t intended as a signal for interest rate liftoff. The chairman then noted that extended periods of unemployment could bring harm to the economy’s productive capacity as well as workers and noted that the delta variant presented a short-term risk to getting back to full employment.
He also observed that while a lot of ground needed to be covered to reach maximum employment, the prospects were good for progress toward that goal. Powell’s speech helped ease concerns that the Fed would tighten monetary policy in an attempt to fight inflation.
The head of metals strategy at MKS, Nicky Shiels, stated in an interview that the chairman’s speech was dovish but wouldn’t prompt large-scale precious metal purchases.
Regardless of the position of the Fed, precious minerals producers such as Asia Broadband Inc. (OTC: AABB) are unlikely to be affected by the volatility in the market for gold.
NOTE TO INVESTORS: The latest news and updates relating to Asia Broadband Inc. (OTC: AABB) are available in the company’s newsroom at https://ibn.fm/AABB
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