The Fed’s latest FOMC Statement is out, and gold & silver have been on the move with some whipsaw volatility. Here’s an update, the FOMC presser, and more…
Update (3:30ish p.m. EST)
Gold & Silver are performing nicely (unlike Powell at his presser):
All things considered.
Notice the whipsaw volatility, especially in gold:
After being worked down to $1955 this morning, gold surged to nearly $2000, then plunged, and then surged again!
Check out these 15-minute charts:
Silver’s lagged over the past couple of days, spike excluded, but what if gold & silver are now playing tag-team with each other, and self reinforcing their moves via constant confirmations?
(by Half Dollar) Was there really ever any doubt as to what the Fed was going to do?
I mean, why does the CME Group even call it “probability” when it is, and has been, a sure thing:
Zero percent interest rate policy (ZIRP), it is!
Needless to say, the Fed just released its July FOMC Statement (bold added for emphasis):
The Federal Reserve is committed to using its full range of tools to support the U.S. economy in this challenging time, thereby promoting its maximum employment and price stability goals.
The coronavirus outbreak is causing tremendous human and economic hardship across the United States and around the world. Following sharp declines, economic activity and employment have picked up somewhat in recent months but remain well below their levels at the beginning of the year. Weaker demand and significantly lower oil prices are holding down consumer price inflation. Overall financial conditions have improved in recent months, in part reflecting policy measures to support the economy and the flow of credit to U.S. households and businesses.
The path of the economy will depend significantly on the course of the virus. The ongoing public health crisis will weigh heavily on economic activity, employment, and inflation in the near term, and poses considerable risks to the economic outlook over the medium term. In light of these developments, the Committee decided to maintain the target range for the federal funds rate at 0 to 1/4 percent. The Committee expects to maintain this target range until it is confident that the economy has weathered recent events and is on track to achieve its maximum employment and price stability goals.
The Committee will continue to monitor the implications of incoming information for the economic outlook, including information related to public health, as well as global developments and muted inflation pressures, and will use its tools and act as appropriate to support the economy. In determining the timing and size of future adjustments to the stance of monetary policy, the Committee will assess realized and expected economic conditions relative to its maximum employment objective and its symmetric 2 percent inflation objective. This assessment will take into account a wide range of information, including measures of labor market conditions, indicators of inflation pressures and inflation expectations, and readings on financial and international developments.
To support the flow of credit to households and businesses, over coming months the Federal Reserve will increase its holdings of Treasury securities and agency residential and commercial mortgage-backed securities at least at the current pace to sustain smooth market functioning, thereby fostering effective transmission of monetary policy to broader financial conditions. In addition, the Open Market Desk will continue to offer large-scale overnight and term repurchase agreement operations. The Committee will closely monitor developments and is prepared to adjust its plans as appropriate.
As customary, in preparation for today’s FOMC, gold & silver got some early morning prep-work to the downside:
Gold recovered from the “selling”, but at 1:30 p.m., silver was still lagging.
Here are gold & silver’s reaction at 2:00 p.m. EST, the minute the FOMC Statement “hit the tape”:
Less than ten minutes in, we see gold has hit fresh all-time highs:
Not typical, but a sign of the times indeed.
Powell will be giving a press conference at 2:30 p.m. EST, which can be seen here:
This post will be updated as needed.