Powell Changes Course! The Fed's Dovish Policy Boosts Gold and Silver
Gold and silver prices surged sharply again in trading on Wednesday (October 15th) Asian time after Federal Reserve Chairman Jerome Powell signaled a more dovish policy stance in his speech at the Community Bank Conference last night. Meanwhile, the US dollar tended to weaken, and global oil prices were limited amid the prospect of a global economic slowdown.
In his speech, Powell emphasized that the central bank would adopt a "meeting-by-meeting" approach in determining interest rates, while also hinting that the Quantitative Tightening (QT) process, or balance sheet tightening, was likely nearing its end. The market interpreted this statement as an open signal for a possible interest rate cut in the coming months.
This statement immediately pushed US bond yields down, which automatically made non-yielding assets like gold and silver once again attractive to investors. Furthermore, uncertainty stemming from the ongoing government shutdown in Washington and rising geopolitical tensions in the Middle East further strengthened the appeal of precious metals as a safe haven asset.
Global gold prices surged to a new record above US$4,180 per troy ounce, while silver followed suit with a significant increase above US$53 per troy ounce.
"The market is starting to assess that the Fed won't keep interest rates high for long, and this is a strong catalyst for the gold rally," said Reuters market analyst Ruchir Kataria.
Meanwhile, oil prices moved within a limited range. Investors believe that while the Fed's policy has the potential to boost growth in the medium term, signs of a global economic slowdown could suppress energy demand. Brent oil prices are trading around US$62 per barrel, slightly lower than the previous session.
The US dollar also appears to be losing steam after bond yields fell. The Dollar Index (DXY) weakened below 99, reflecting pressure from expectations of interest rate cuts. (mrv)
Source: Newsmaker.id
