Today, the Federal Reserve released its minutes from the past two emergency meetings. It was during these emergency meetings that the Fed decided to bring interest rates down to near zero, and to keep them at that rate until the economy “survived” the pandemic. coronavirus.
The first emergency meeting was held remotely on Sunday March 15, the second emergency meeting was held on May 3. The minutes of the meeting said that “all participants considered that the short-term US economic outlook has deteriorated sharply in recent weeks and has become deeply uncertain. ”
In order to have maximum impact on the US economy, which is essentially in shutdown mode, the Fed has approved a series of consecutive rate cuts bringing Fed funds rates to zero – ¼%.
According to CNBC, at its meeting on March 15, the Fed said “not only did they consider it important to use all their pricing power now, but also that they intended to keep rates anchored lower in the foreseeable future, according to the minutes. published Wednesday. ”
The Fed not only cut rates to almost zero, but also increased its purchases of assets which had an initial target of $ 700 billion to “unspecified levels as long as markets and the economy were to be kept at afloat, ”says Bob Miller. , responsible for BlackRock asset management.
These actions by the Federal Reserve had a deep and bullish impact on the price of gold because interest rates were lowered to zero, and the reconstitution of monetary policy of quantitative easing without predefined limits coupled with spending Losses by the US government have driven the price of gold considerably higher in the past two weeks.
Since April 1, gold has increased by more than $ 100. The move from gold from a low of $ 1,576 at today’s close to $ 1,679.50 is directly linked to these recent actions by several branches of the United States government.
That being said, even with today’s close which drove gold down $ 4.20 a day, the current price of gold futures at $ 1679.50 shows extreme volatility. and market uncertainty. Many analysts believe that the global coronavirus pandemic should continue to strongly support the price of gold.
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I wish you as always good trading,
Gary S. Wagner
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