Hawaii Six O - Gary Wagner
The Federal Reserve releases minutes from the last two emergency meetings
Kitco Commentaries | Opinions, Ideas and Markets Talk
Featuring views and opinions written by market professionals, not staff journalists.
Today the Federal Reserve released its minutes from the last two emergency meetings. It was during these emergency meetings that the Fed decided to move interest rates to near zero, and keep them at this rate until the economy has “weathered” the coronavirus pandemic.
The first emergency meeting was held remotely on Sunday, March 15, the second emergency meeting occurred on May 3. The minutes from this meeting said that, “All participants viewed the near-term U.S. economic outlook as having deteriorated sharply in recent weeks and as having become profoundly uncertain.”
In order to have maximum impact upon the economy in the United States, which in essence has been in shutdown mode, the Fed approved a series of back to back rate cuts taking Fed funds rates to zero - ¼%.
According to CNBC, during their meeting on March 15 the Fed indicated “that not only did they consider it important to use all their rate power now, but also that they intend to keep rates anchored at the bottom for the foreseeable future, according to minutes released Wednesday.”
The Fed not only took rates to near zero they also expanded their asset purchases which had an original target of 700 billion to an “un-specified level so long as there needed to keep markets functioning and the economy afloat”, this according to Bob Miller, head of BlackRock asset management.
These actions by the Federal Reserve have had a profound and bullish impact on the price of gold as interest rates were lowered to zero, and reenactment of the monetary policy of quantitative easing with no preset limits coupled with deficit spending by the U.S. government have driven the price of gold dramatically higher over the last two weeks.
Since April 1 gold has moved up over $100. Gold’s move from a low of $1576 an ounce to today’s close of $1679.50 is directly related to these recent actions by multiple branches of the United States government.
That being said, even with today’s close which took gold $4.20 lower on the day, current pricing on gold futures at $1679.50 demonstrates the extreme volatility and uncertainty in the markets. Many analysts believe that the global coronavirus pandemic should continue to be highly supportive of gold pricing.For those who would like more information simply use this link. Wishing you as always good trading, Gary S. Wagner