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Gold price tanks as Powell is about to ‘overtighten’, cause ‘panic in U.S. equities’

Kitco News

Gold fell by 1% on Friday following U.S. Federal Reserve Chair Jerome Powell’s announcement of a faster pace of monetary tightening this year.

Speaking at an IMF meeting, Powell said that “Inflation is much higher now and our policy rate is still more accommodative than it was then so it is appropriate, in my view, to be moving a little bit more quickly.”

Phil Streible, chief market strategist at Blue Line Futures told David Lin, anchor for Kitco News, that the Fed is expected to raise rates by roughly 2.5% this year.

“We’re at about 9.96 25-basis point hikes by the end of the year, so that is definitely going to put some pressure on the market,” Streible said.

He noted that this is likely an overextension of rate hikes, and the markets won’t react well.

“I think in the long run, what happens is the Fed will overtighten right off the gate, they’ll create kind of panic in U.S. equities and then from that point, you’ll start to see [inflation] level off,”

Streible added that gold will likely trade sideways in the medium term.

For more information on gold’s next key price targets, watch the video above.

Follow David Lin on Twitter: @davidlin_TV

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