How is gold responding to the Federal Reserve’s vote to leave interest rates near zero?
Prices rose more than 1%, lifting the demand for the safe-haven metal.
Last year, to help prop up the economy, the Federal Reserve promised to increase their monthly bond purchases and sustain those monthly purchases until the economy showed signs of recovery.
After more than a year of roughly $120 billion of monthly bond purchases, they are now vocalizing their plans to begin the tapering process.
And no, we are still not out of the pandemic, and the economy is still a ways away from being on the road to recovery.
Not to mention the rising inflation rates, which many blame on the Fed, that has spiraled out of control.
Although they’ve acknowledged that price increases have been more rapid, they are not backing off the use of the controversial word “transitory.”
However, the unfolding of these events has fueled what some refer to as the spark of the next gold bull run.
In a Reuters article, Stephen Innes, managing partner at SPI Asset Management, commented:
“The Fed’s push back against inflation leaves gold in a decent position, for now, to move higher until the Fed ultimately signals that ‘we’re not in transitory anymore and we’re going to start hiking rates to defend against inflation.”
Easy monetary policy and the near-zero interest rates throughout the pandemic have propelled gold prices to new highs over the last two years.
Considering gold’s historical performance, Innes may be correct as it performs strongly in times of economic trouble where inflation runs high.
In fact, savvy investors have viewed and treated gold as a safe haven from market turbulence and high inflation.
Many rushed to gold in 2020 when the pandemic shut down global economies, later breaking its all-time high record price.
However, unusually high inflation numbers are something we have been battling as a country for quite some time now.
Americans nationwide are experiencing rising prices eating away at their savings and daily necessities such as gasoline and groceries.
To some, it’s just a matter of time before gold gains the attention it deserves.
Global gold market adviser at The Perth Mint, Kevin Rich, told MarketWatch, he believes that gold prices and demand will see a “very constructive environment, ”given“ massive debt added around the world through the pandemic,” as well as the difficult path the Fed and other global central banks face.
Financial analysts have noted how the Fed is between a rock and a hard place with their hands tied behind their backs.
If companies are dealing with inflation by pushing higher costs to consumers, do you believe it eventually will settle down and adjust “back to normal”?
Call American Hartford Gold today at 800-462-0071; we can help with a strategy in place to protect your hard-earned savings.