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To be more precise, it is the decisions and the monetary policy of the Federal Reserve that are the underlying cause of today's market movements. At the head of the central bank, Jerome Powell held the message at a press conference following the FOMC meeting.
What he said was: "The arguments in favor of a rise in interest rates have weakened." He cited multiple reasons for this decision, including moderate inflation and slower economic growth than expected in the United States. He especially emphasized the word "patient" with regard to the future movements of the central bank.
Today, Powell made another extremely important statement about the huge balance sheet of badets currently held by the Federal Reserve. Until then, their liquidation of badets is done in autopilot. When the Fed announced for the first time that it would begin to liquidate its badets, it has put in place a protocol that speeds up at a predefined time and reduces the balance sheet since the start of the liquidation sale.
According to the Federal Reserve, the central bank has reduced its badets by nearly half a trillion dollars. The following quote is taken directly from the Federal Reserve Board of Governors' website: "Since the beginning of the turmoil in August 2007, the Federal Reserve's balance sheet has grown in size and its composition has changed. Total Federal Reserve badets increased substantially from $ 870 billion as at August 8, 2007 to $ 24.5 billion on January 14, 2015, and decreased since the start of the FOMC balance sheet normalization program in October 2017. "
The reduction of the balance sheet is currently "in the process of being reduced". A term coined by the Fed. However, the monthly reduction has been incorporated into the current policy, with an exact amount of monthly liquidations. The fact that the Fed is now sensitive to this liquidation is perhaps one of the most important elements of the statement released today.
Gold has presented a double dose of bullish influence, a weaker dollar creating value for gold as well as long positions pushing up the precious metal upward. That's the weak dollar that had the biggest influence on precious metals earnings.
The dollar index lost nearly 0.5% in trading today to close at 95.085. On a technical level, we do not expect any significant support before 94.00, which means that the dollar will most likely lose another full percentage point.
At 17:07, the spot gold, at Eastern Standard Time, is currently set at $ 1319 an ounce, after a net gain of $ 7.70 today. 39; hui. According to the KGX (Kitco Gold Index), the weak dollar contributed about $ 6.20 to today's earnings, with the remaining 1.50 gains directly attributable to purchases.
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Wishing you as always, good business,
Warning: The opinions expressed in this article are those of the author and may not reflect those of the author. Kitco Metals Inc. The author has endeavored to ensure the accuracy of the information provided. However, neither Kitco Metals Inc. nor the author can guarantee such accuracy. This article is strictly for informational purposes. This is not a solicitation to exchange merchandise, securities or other financial instruments. Kitco Metals Inc. and the author of this article do not accept liability for losses and / or damage resulting from the use of this publication.
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