The Federal Open Market Committee's policy statement didn't offer much new to chew on aside from a widely expected 25bps rate hike and a confirmation that ongoing rate increases "will be appropriate". However, it was during the press conference that Chairman Powell stated "It is gratifying to see the disinflationary process now getting underway ."
This comment along with an overall subdued tone from Powell sent the US dollar and 10-year UST yields tumbling:
10-year US Treasury yields tumbled during Fed Chairman Powell's press conference on the notion that a disinflationary process has begun
Meanwhile, gold blew through the $1950 resistance level that it had been toying with for much of the last week:
Gold (2-Hour)
Today's FOMC statement and Powell press conference have left markets betting that the Fed is 1-2 meetings away from pausing its rate-hiking cycle. Furthermore, the Fed Funds Swaps market seems to have taken Powell at his word that a deflationary process has begun and the market is now pricing in two rate cuts by year end.
Gold now finds itself in the sweet spot of the cycle with a Fed that is on the verge of blinking in the face of a slowing economy and the beginning of a disinflationary cycle. The scenario laid out in my "Uber Bull Case For Gold" video from October appears to be on the verge of playing out - it is this scenario (Fed easing and implementing yield curve control in an environment with inflation above its target) that could send gold soaring to new all-time highs above $2100/oz.
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