Home / Metal News / Precious Metals / [institutional point of view] Precious metal hot spot hint: the Federal Reserve meeting is approaching and the gold and silver wait for guidance.
[institutional point of view] Precious metal hot spot hint: the Federal Reserve meeting is approaching and the gold and silver wait for guidance.
Sep 15,2020 14:20CST
translation
Source:Guoxin futures
The content below was translated by Tencent automatically for reference.

SMM: in the early hours of Thursday, September 17, the Federal Reserve will announce its September interest rate resolution, which may provide guidance for precious metal prices. The Fed is now expected to keep the benchmark federal funds rate at its current level of close to zero until 2023, showing more optimism in economic forecasts and providing more operational details on the average inflation system in the new monetary policy framework. If the Fed sends an additional signal of easing, it could push gold and silver upward beyond the volatility range.

Gold and silver have been in shock consolidation since the end of August, mainly due to a correction under pressure after US 10-year inflation expectations rose to 1.8 per cent near this year's peak, US bond interest rates and the dollar index remained low and lack of direction. Due to the recent pullback in US stocks and the weakness of crude oil prices, a new round of fiscal stimulus bill is still deadlocked, the recovery of demand in the real economy has been falsified in stages, and inflation expectations that have risen too rapidly in the previous period have been revised. Inflation expectations lack momentum to pick up in the short term, and gold and silver are under pressure.

Reviewing the recent developments of the Federal Reserve, at the annual meeting of the global central bank in Jackson Hole in August, Federal Reserve Chairman Colin Powell did not disclose specific operational details on the average inflation system. At the interest rate discussion meeting of the Federal Reserve in July, the Federal Reserve held a negative attitude towards the implementation of yield curve control and negative interest rates at this stage, and tended to be delayed and ambiguous in the statement of the interest rate forward guidance, which made the market worried about the future policy direction of the Federal Reserve.

This meeting is the last meeting of the Federal Reserve to discuss interest rates before the US election, and it is also the first meeting of the Federal Reserve since Federal Reserve Chairman Colin Powell announced an adjustment to the monetary policy framework at the end of August. The Federal Reserve will extend its forecast of the policy benchmark interest rate to 2023 for the first time. At this meeting, the Federal Reserve may give clearer guidance on the details of the average inflation system and the inflation target under the new monetary policy framework. Given Powell's recent statement that the Fed will keep interest rates low for years to come, it is highly likely that the Fed will maintain its current benchmark interest rate of close to zero until 2023. The weekly unemployment data is still high, the labor market repair is weak, and the Fed is expected to maintain its current easing. Recently, the performance of PMI, CPI and other economic data in the United States has significantly improved compared with July, and the Federal Reserve may be more optimistic than the previous economic forecast released at this meeting, which will give a boost to long-term US debt interest rates, but under the pressure of huge government debt, it is expected that US debt interest rates have limited room to rebound. If the Fed sends additional easing signals at the meeting, it will push gold and silver upward to break through the volatility range.

Looking ahead, inflation expectations are under pressure and gold and silver remain volatile in the short term, and the market waits for guidance from the Fed meeting. In the long run, while the repair of the US real economy is still very limited, the dovish position of the Federal Reserve is likely to continue, nominal interest rates on US bonds will mainly fluctuate at low levels in the future, and the inflation target will be relaxed to facilitate the rebound of medium-and long-term inflation expectations. the long-term asset allocation of precious metals is still prominent.

Silver Industry chain Summit Forum

Seminar on the Application of Silver Market in China

Scan the code to participate in the meeting or apply to join the SMM Precious Metals Industry Exchange Group.

Precious metals
industry
mining
production capacity

For queries, please contact Frank LIU at liuxiaolei@smm.cn

For more information on how to access our research reports, please email service.en@smm.cn

Related news