MarketWatch/Jeffry Bartash
Economy suffers titanic 32.9% plunge in 2nd quarter, GDP shows, and points to drawn-out recovery

GDP DeclineCoronavirus triggers steepest recession since World War Two.

The numbers: An economy badly battered by the coronavirus shrank at a record 32.9% annual pace in the second quarter, underscoring just how big a hole the U.S. finds itself in as it labors to recover from the deepest recession in American history.

The tidal wave of damage from the first global pandemic in a century was almost as bad as Wall Street expected. Analysts polled by MarketWatch had forecast a whopping 35% decline in gross domestic product, the official scorecard of the U.S. economy.

The economy began to recover in mid-May after a severe contraction at the beginning of the quarter, but the U.S. faces a long road back, analysts say. Millions of Americans are still out of work, thousands of businesses have closed and many of those that remain open have had to scale back operations because of tepid demand or ongoing government restrictions.

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CNBC/Jeff Cox
Fed holds rates steady, says economic growth is ‘well below’ pre-pandemic level

Jerome Powell The Federal Reserve held interest rates steady in a decision announced Wednesday that came along with a tepid outlook on the coronavirus-plagued economy.

In a move widely expected, the central bank kept its benchmark overnight lending rate anchored near zero, where it has been since March 15 in the early days of the pandemic.

Along with keeping rates low, the Federal Open Market Committee, which sets monetary policy, expressed its commitment to maintain its bond purchases and the array of lending and liquidity programs also associated with the virus response.

“We are committed to using our full range of tools to support our economy in this challenging environment,” Fed Chairman Jerome Powell said.

The post-meeting statement labeled the current state of growth as better than it was at the trough but still not up to par.

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Kitco/Neils Christensen
An impending equity bear market will ultimately push gold price to $4,500 – Bloomberg Intelligence

GoldBarThe Federal Reserve has pumped trillions of dollars to stabilize the U.S. economy and financial markets devastated by the COVID-19 pandemic. With that trend expected to continue for the foreseeable future, one market strategist said the best way not to fight the central bank is by investing in precious metals.

In an interview with Kitco News Mike McGlone, senior commodity strategist at Bloomberg Intelligence, said the gold market is looking a little stretched. Prices have pushed to a record high and within striking distance of $2,000. He added that fundamentally, gold is nowhere near overvalued levels as the U.S. central bank continues to pour money into financial markets.

“In the short term, we have gold about 21% above its 52-week mean, that’s the most since the peak in 2011,” he said. “You don’t want to be the first buyer at these levels. Anytime gold gets this high above its 52-week average, you got to expect consolidation.”

Although gold investors should be a little more strategic with their buying, McGlone said that they shouldn’t lose sight of the bigger picture, which is materially higher gold prices. McGlone reiterated his call that gold will needs to get “stupidly” expensive before this rally ends and that could mean prices above $4,000 an ounce.

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Marketwatch/Myra P. Saefong and William Watts
Gold logs record close, up a ninth straight session, then climbs after Fed’s policy statement

Gold logsGold futures tallied a ninth gain in a row on Wednesday to settle at another record, then moved even higher after the Federal Open Market Committee reiterated plans to keep interest rates near zero until the economy sees further improvement.

In its statement after two days of talks, the Fed noted economic activity and jobs “have picked up somewhat in recent months” while pledging again to use its full range of tools to support further improvement.

“The Fed came out with no surprises, and basically told the market it would be business as usual going forward — or unusual as the case may be,” said Brien Lundin, editor of Gold Newsletter. “With this one, small element of uncertainty removed, gold responded well and resumed its rally.”

Against this backdrop, gold for August delivery GC00, -0.02% GCQ20, -0.02% was at $1,958.40 an ounce in electronic trading shortly after the Fed statement. It posted a gain of $8.80, or nearly 0.5%, Wednesday to settle at a record of $1,953.40 an ounce on Comex ahead of the Fed news.

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