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RSM Chief Economist Joseph Brusueras: Warsh delivered the right hawkish signals at the press conference and attempted to reinforce the Fed’s credibility in restoring price stability, while also enhancing his own credibility.U.S. stocks continued to decline after the Walsh press conference, with the S&P 500 falling 1%, its biggest drop since July 29, the Dow Jones Industrial Average down 1.65%, and the Nasdaq Composite down 0.6%.On September 17th, Federal Reserve Chairman Warsh declined to answer questions at a press conference regarding his interactions with US President Trump. Trump has been calling for lower interest rates in recent months. Warsh stated, "I have no comment on my discussions with the president." White House Council of Economic Advisers Chairman Christopher Phelan said on Tuesday that raising interest rates would be a "mistake."On September 17th, Federal Reserve Chairman Warsh stated that he would not disclose details of future interest rate decisions by the Federal Open Market Committee (FOMC). He said, "I am not responsible for providing forward guidance. Our decision today (to raise interest rates) is a carefully considered, serious, and responsible one. We have been preparing for and thinking about this decision for the past 110 or 120 days." Warsh also stated that this decision was not market-driven. He said, "Our decision today is based on our assessment of the current situation, our judgment of the employment trend, and our assessment of the strength of the economy. Sometimes, the market tries to anticipate our decisions. I watch market prices to see what information the market is sending. But todays decision is our own."On September 17th, Warsh stated that while the Federal Reserve cannot prevent price shocks in commodities such as oil on its own, the central bank can use policy tools to prevent further spread of inflationary pressures. Warsh said, "We cannot influence the price of any single commodity, such as oil or groceries." However, he pointed out, "We can and will ensure that any changes in relative prices do not spread further, and do not have second- or third-order effects on the economy. Thats our responsibility, and thats what were doing." Warsh made these remarks as U.S. diesel prices hit a record high due to the Iran war.

In response to China's stimulus, gold recovers sharply from a six-week low, while copper prices rise

Aria Thomas

Sep 06, 2022 11:22

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On Tuesday, gold prices dramatically rallied from a six-week low as a worsening energy crisis in Europe increased demand for safe-haven assets, while copper extended gains in anticipation of fresh Chinese stimulus measures.


Spot gold jumped 0.5% to $1,718.95 per ounce by 21:03 ET, while gold futures rose 0.5% to $1,730.0 per ounce (01:03 GMT). Both instruments rallied from a six-week low early in the month.


After Russia severed a crucial gas pipeline to Europe, putting the area at risk of a severe energy crisis, the demand for conventional safe havens rose. The euro reached new 20-year lows this week, as the crisis is expected to have a substantial impact on economic growth in the eurozone. It is largely anticipated that the European Central Bank will begin to hike interest rates at a meeting later this week.


As traders awaited additional clarity on the future of U.S. monetary policy, Tuesday's dollar index rally appeared to have stopped. However, expectations of future Federal Reserve rate hikes bolstered the dollar's position near 20-year highs.


This year, rising interest rates have had a negative impact on gold prices, as speculators have sought higher yields from the dollar and Treasuries. In addition, it is largely expected that the Federal Reserve will maintain its rate-hiking pace this month.


In addition, other precious metals rose significantly on Tuesday. Platinum jumped by 0.6%, while silver rose by 2%. Both metals rebounded from their 15-month lows.


Copper prices climbed 0.2% among industrial metals, with gains continuing after China hinted at an expansion of economic stimulus measures.


Copper Futures expiring in December rose 0.2% to $3.4665 a pound on Tuesday, following a roughly 2% increase on Monday.


As the economy barely grew in the second quarter, Chinese government authorities announced on Monday that the country would likely enhance its pace of stimulus measures in the third quarter.


This year, the second-largest economy in the world confronts significant headwinds from COVID-19 lockdowns and a probable energy crisis.

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