The Fed is nearing the time to pull back its financial support created during the pandemic. Officials now must decide how they should do so. While their views are mixed, some analysts believe a decision should be made in early September. In other news, some experts say gold’s drop from record highs doesn’t spook them, and it shouldn’t spook you.
Factbox-In their own words: Fed policymakers debate when to reduce stimulus
The Federal Reserve is nearing the point of reducing its massive support for the economy, with analysts expecting an initial decision as early as next month on when and how the U.S. central bank should begin cutting its $120 billion in monthly purchases of Treasuries and mortgage-backed securities.
In the past two weeks, more than half of the Fed’s policymakers have given stronger indications of their preferences for how that process should play out, and it is up to Chair Jerome Powell to fashion a consensus from a wide and sometimes competing range of views.
You can read some of the policymakers’ comments on the matter, here.
Kitco News/Anna Golubova
Why gold’s $300 drop from record highs shouldn’t spook you, Wells Fargo weighs in
Gold seems to be in a rough patch, down 12% since last August when the precious metal hit new record highs of above $2,050 an ounce. But Wells Fargo said it is not spooked by this underperformance and here’s why.
“Gold has had a rough 12 months, at least on a relative basis. The average commodity (using the Bloomberg Commodity Index) is up 34% since August 2020, while the gold spot price is down 12%. Does this spook us? No, not really,” said Wells Fargo’s head of real asset strategy John LaForge.
Commodity bull cycles are known for their “rotating leadership,” meaning that a bullish trend in one commodity can be replaced by a more powerful bullish trend in another commodity within that one cycle. This is exactly what happened, LaForge said in a report.
Read the full story, here.
Fed has its ‘foot on the accelerator’: Market expert
MI2 Partners co-founder and President Julian Brigden argues markets would react differently to consumer spending if policymakers weren’t involved.
You can watch the full interview, here.