Gold prices fall as Powell approaches ‘excessive tightening’, causing ‘panic in US stocks’
Gold fell 1% on Friday after US Federal Reserve Chairman Jerome Powell announced 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 favourable than it was then, so it is appropriate, in my view, that we move a little more quickly.”
Phil Strebel, chief market strategist at Blue Line Futures, told Kitco News anchor David Lane that the Fed is expected to raise interest rates by about 2.5% this year.
“We’re at about 9.96 25 basis points by the end of the year, so that’s definitely going to put some pressure on the market,” Strebel said.
He noted that this is likely to be an excessive extension of interest rate hikes, and markets will not react well.
“I think in the long run, what happens is the Fed is going to overtax immediately, and it will create a kind of panic in US stocks, and from that point on you will start to see [inflation] level off,”
Strebel added that gold is likely to trade sideways in the medium term.
For more information on the following major price targets for gold, watch the video above.
Follow David Lean on Twitter: Tweet embed
Follow Kitco news on Twitter: Tweet embed
Not giving an opinion: The opinions expressed in this article are those of the author and may not reflect the opinions of Kitco Metals Inc. The author has made every effort to ensure the accuracy of the information provided; However, Kitco Metals Inc. cannot. Nor does the author guarantee this accuracy. This article is for informational purposes only. It is not a solicitation to conduct any exchange in commodities, securities or other financial instruments. Kitco Metals Inc. does not accept The author of this article will be liable for losses and/or damages arising from the use of this publication.
Leave a Comment