Gold Prices: Down After Powell Remarks

Newly minted Federal Reserve Chair Jerome Powell faced Congress for the first time Tuesday, and he’ll be back again Thursday. Already, the stances he’s taken have affected gold prices. To summarize, Powell said he wasn’t concerned about recent stock market volatility, and that he worries more about inflation. He also claimed to see “as many as four” interest rate increases in 2018. He acknowledged the stimulus from tax cuts and increasing government spending, though he stopped short of tying them directly to rising inflation.

So, a fairly hawkish start to his first term as Fed Chair. Powell’s immediate predecessors were often criticized for their proactive efforts to calm markets when they got volatile. The press even gave this a name: the Bernanke put.  Powell didn’t show his hand in that regard, and it’s far too early to speculate on what he’ll do if volatility increases or the market heads down in a big way. In the wake of his remarks the US Dollar gained strength, gold prices fell slightly, and no one was terribly surprised.

Powell came across as intelligent and straight-shooting, something we all love in financial policy makers.  Powell goes back before Congress today, and it will be interesting if he says anything more of substance or if it’ll be reiterating the same points. Right now, we’re expecting the first interest rate hike to happen later in March.

You can watch Powell’s Tuesday testimony here, and also read a day-later analysis of his comments and how the market reacted here.

Related: Gold Figures for Last Year Are In – And Here’s What They Mean for 2018

About the author

Mike Hammer

Mike Hammer has had a wide-ranging career, with trading and investing as a continuing theme. Mike graduated from UC Berkeley with a business degree, then worked with Macy's in their operations arm. He left Macy's and spent a summer trading his own account, which taught him a lot about trading in general and markets in particular. Trading through the Black Monday and the Crash of 1987 showed him how most people are unprepared for upheavals in their trading. He then joined Waddell & Reed as a financial advisor, helping regular people understand their finances and meet their life goals.

Then came the usual story - Mike met and married the lady of his dreams. They moved to upstate New York, where Mike worked first for a small manufacturing consulting company, then Cornell University. While loving the work and the higher-education atmosphere, Mike missed the world of finance. Eventually, he signed up for stock trading coaching with the Adam Mesh Trading Group, to learn from people who understood modern markets. Within a year, Adam asked Mike to become a stock trading coach.

Since then, Mike has trained over 200 individuals, spoke at several national conventions, and is a frequent contributor to conference calls across the Adam Mesh community. Mike writes The Gold Enthusiast daily newsletter, runs the Golden Hammer trading service, and participates in the Mesh Private Portfolio. He also keeps a position in international education which keep him in touch with "the student mindset". Mike closely follows the gold, energy, and financial sectors. His motto is "Plan your trade, then trade your plan!"

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