Phil Carr
The Gold & Silver Club
Precious metal prices received a huge boost this week after the Federal Reserve pledged to continue its massive quantitative easing program until 2024 at the earliest.
Gold and Silver prices skyrocketed on Wednesday following the FOMC’s final policy meeting of 2020, when Fed Chairman Jerome Powell “made it very clear that interest rates will remain zero until 2024 and they are fully committed to pushing inflation higher”.
Given rising inflation expectations, weakening dollar and still no clear end in sight to the pandemic – demand for safe-haven inflation hedges should remain well supported ahead – ultimately continuing to drive precious metal prices higher throughout 2021.
Traders’ attention has now shifted to U.S Government stimulus for clues on Gold and Silvers next big move.
U.S. Congress appears to be making progress on a new fiscal stimulus package for Americans. The recent wave of lockdown measures has severely weighed on the economic recovery, prompting the need for more stimulus urgently before year-end. On Thursday, U.S lawmakers from both parties hinted that failure to agree to a deal was no longer an option.
Any stimulus is good stimulus. The only question now, is how much and when.
Where are prices heading next? Watch The Commodity Report now, for my latest price forecasts and predictions:
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EUR/USD treads water just above 1.0400 post-US data
Another sign of the good health of the US economy came in response to firm flash US Manufacturing and Services PMIs, which in turn reinforced further the already strong performance of the US Dollar, relegating EUR/USD to the 1.0400 neighbourhood on Friday.
GBP/USD remains depressed near 1.2520 on stronger Dollar
Poor results from the UK docket kept the British pound on the back foot on Thursday, hovering around the low-1.2500s in a context of generalized weakness in the risk-linked galaxy vs. another outstanding day in the Greenback.
Gold keeps the bid bias unchanged near $2,700
Persistent safe haven demand continues to prop up the march north in Gold prices so far on Friday, hitting new two-week tops past the key $2,700 mark per troy ounce despite extra strength in the Greenback and mixed US yields.
Geopolitics back on the radar
Rising tensions between Russia and Ukraine caused renewed unease in the markets this week. Putin signed an amendment to Russian nuclear doctrine, which allows Russia to use nuclear weapons for retaliating against strikes carried out with conventional weapons.
Eurozone PMI sounds the alarm about growth once more
The composite PMI dropped from 50 to 48.1, once more stressing growth concerns for the eurozone. Hard data has actually come in better than expected recently – so ahead of the December meeting, the ECB has to figure out whether this is the PMI crying wolf or whether it should take this signal seriously. We think it’s the latter.
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