Fed Chair Jerome Powell Talks Down Gold Prices; 'Recession Risks Not High'
(Kitco News)- Upbeat comments on the U.S. economy from new Fed ChairJerome Powell is dragging gold prices down to a two-week low.
While markets saw little reaction to Powell’s openingremarks, which some economists deemed hawkish, they are reacting to commentsduring the question and answer portion of the hearing. Both gold and equitieshave lost ground following Powell’s optimistic outlook. At the same time bondyields have spiked.
April gold futures last traded at $1,318.70 an ounce, down1% on the day; at the same time 10-year bond yields last traded at 2.91%. TheS&P 500 last traded at 2,768 an ounce, down 0.37% on the day.
Gold’s selloff started after Powell noted that he sees onlymoderate risk in the financial sector despite the fact that asset prices arehigh.
“Risksof recession are not at all high at the moment,” he said.
Duringthe Q&A, Powell reiterated his outlook in his opening statement that theU.S. economy is strengthening.
“Therobust job market should continue to support growth in household incomes andconsumer spending, solid economic growth among our trading partners should leadto further gains in U.S. exports, and upbeat business sentiment and strongsales growth will likely continue to boost business investment,” he said in hisopening remarks.
Despitehis optimistic, even hawkish tone, Powell was elusive in answering if he thinksthe Federal Reserve will raise interest rates four times this year. Currentlythe central bank is expecting to raise interest rates three times.
For Kitco News
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