Gold exploded to one-week highs as it tried to break the resistance number of $1,750 per ounce after Fed Chair Jerome Powell celebrated economic progress and seemed to hint at a possible rollback of asset purchases.

“As we take more progress toward our goals, we will slowly roll back the total mortgage-backed securities and Treasurys we have purchased,” Powell said to NPR during a live interview. “We will very slowly and with great public awareness when the economy has fully recovered, we will pull back support that we gave during the emergency.”

The Federal Reserve currently completes $120 billion in bond purchases every month.

In reaction to the comments, gold climbed to a 7 day high, with June Comex futures getting to $1,747.10 per ounce. But the push to break through $1,750 per ounce failed as prices pulled back, and June futures went to $1,735.20, which is down by 0.02% daily.

Powell also stressed that the economy is recuperating faster-than-expected because of monetary and fiscal stimulus and progress on the vaccine. This will let the Fed taper at some time in the future, Powell stated on Thursday.

“It’s a combination of COVID developments, especially the vaccines, and economic support from Washington. That is really what is driving it,” he stated. “That will let us reopen the economy sooner than we expected.”

The Fed was fast to respond to the pandemic, slashing rates to almost zero and completing $120 billion in monthly bond purchases. Also, Congress gave over $4 trillion in stimulus over the past year.

Powell promised to maintain the central bank’s liberal stance until the economy gets to full employment and inflation averages near 2%.

During his NPR interview, Powell repeated his stance that any rate increase would only be done “when the economy essentially fully recovers.”

Author: Blake Ambrose

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