Powell's speech pleases investors of both risky and safe asset classes.
The head of the Fed Jerome Powell spoke at the annual event: the virtual economic symposium hosted by the Federal Reserve System of Kansas City. Traders and market participants were waiting for his speech to better understand the current mood of the Fed regarding their very flexible monetary policy. The tone of his prepared remarks was interpreted as softer than at the FOMC meeting last month, stating that monetary policy remains unchanged until necessary.
In view of this, the price of precious metals soared. Gold closed the week at $ 1,820.50. Powell's words contained the right tone and timbre to satisfy investors and market participants.
There were two main conclusions in Chairman Powell's speech. First, the Fed still considers the recent spikes in inflation to be mostly temporary. The second was that, despite the fact that the Fed is not far from reducing its monthly asset purchases by $ 120 billion, it made a big difference between the beginning of the reduction and the timing of the start of interest rate hikes.
His speech made it possible for the prices of gold and silver to grow significantly in the coming weeks. The next important set of data that market participants will focus on will be the US Department of Labor's employment reports for August. This will be a key report that the Fed members will consider when they meet at the FOMC meeting in September.
