empty
 
 
You are about to leave
www.instaforex.eu >
a website operated by
INSTANT TRADING EU LTD
Open Account

01.12.202214:15 Forex Analysis & Reviews: Powell's comments put gold back in rally mode

This information is provided to retail and professional clients as part of marketing communication. It does not contain and should not be construed as containing investment advice or investment recommendation or an offer or solicitation to engage in any transaction or strategy in financial instruments. Past performance is not a guarantee or prediction of future performance. Instant Trading EU Ltd. makes no representation and assumes no liability as to the accuracy or completeness of the information provided, or any loss arising from any investment based on analysis, forecast or other information provided by an employee of the Company or otherwise. Full disclaimer is available here.

Exchange Rates 01.12.2022 analysis

Gold prices rose Wednesday as market participants reacted to Fed Chairman Jerome Powell's speech at the Hutchins Center on Fiscal and Monetary Policy at the Brookings Institution in Washington.

Exchange Rates 01.12.2022 analysis

Market participants listened attentively to his words, hinting at the dynamic changes in the monetary policy of the Federal Reserve System.

However, it should be noted that the reaction of investors in general seems to be focused on the fact that they were hoping to hear that the Fed will start raising rates at a slower pace, and not that the Fed will take longer to reach their target.

"It is likely that restoring price stability will require holding policy at a restrictive level for some time. History cautions strongly against prematurely loosening policy. We will stay the course until the job is done," Powell said.

Powell's speech on Wednesday eased investors' concerns as they reacted to other members of the Federal Reserve who announced an upcoming rate hike. In particular, James Bullard's recent remarks underscored the Fed's hawkish intent. Last week, he commented on the need to raise the Federal Reserve's base rate to 7% to fight inflation. He said this week that "the Federal Reserve will likely need to keep its benchmark policy rate north of 5% for most of 2023 and into 2024 to succeed in taming inflation."

Powell's statements in no way contradicted statements made earlier by Bullard and other members of the Federal Reserve in his prepared speech. However, the chairman was able to deliver the message in a much softer tone. Powell essentially sealed a 50 basis point rate hike at the December FOMC meeting. However, he stressed that a slowdown in rate hikes would require the Fed to maintain restrictive monetary policy for a longer period.

Gold's recent rally from $1,621 to nearly $1,800 is a reflection of a major shift in investor sentiment in the market. This suggests that investors are paying close attention to inflation and reducing inflation to restore price stability will be a multi-year process.

Irina Yanina
Analytical expert of InstaForex
© 2007-2024

Open trading account

InstaForex analytical reviews will make you fully aware of market trends! Being an InstaForex client, you are provided with a large number of free services for efficient trading.




You are now leaving www.instaforex.eu, a website operated by INSTANT TRADING EU LTD
Can't speak right now?
Ask your question in the chat.

Turn "Do Not Track" off