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Federal Reserve Chairman Warsh will hold a monetary policy press conference in ten minutes.On July 30th, Federal Reserve officials kept interest rates unchanged, but the vote was divided, showing that some policymakers are increasingly convinced that a rate hike is needed to curb rising inflation. Logan, Hammark, and Kashkari all voted against a 25-basis-point increase. This marks the fifth consecutive time officials have chosen to keep rates unchanged. The rest of the committees post-meeting statement was entirely consistent with the statement released after the June meeting. Officials reiterated their commitment to "achieving price stability." However, the dissenting votes suggest that for Fed Chair Warsh, who just took office in May, continuing to hold rates steady will face greater challenges if inflation concerns intensify. Trump has repeatedly called for rate cuts, including this Monday. Warsh, nominated by Trump to be Fed Chair earlier this year, stated that he would ensure policy decisions are not influenced by politics.On July 30th, in this interest rate decision, three of the five regional Federal Reserve presidents voting on the Federal Open Market Committee (FOMC) voted against it: Cleveland Fed President Hammark, Minneapolis Fed President Kashkari, and Dallas Fed President Logan. All three unanimously advocated for a 25 basis point rate hike. This is the first time since September 2016 that the Fed has seen three unanimous dissenting votes in a single policy decision, reflecting a growing voice within the Fed supporting a tightening policy. Fed Chairman Warsh, who supports maintaining the current interest rate, has consistently emphasized the Feds responsibility to curb inflation. He is expected to be asked at the press conference at 2:30 AM Beijing time why he believes continuing to be patient remains the most appropriate policy option.Market expectations indicate that the market is no longer fully pricing in a September rate hike by the Federal Reserve.Nick Timuraos, the Feds mouthpiece: The FOMC decided to keep interest rates unchanged with a 9-3 vote. Three regional Fed presidents voted against a 25-basis-point rate hike. This is the first time since 2016 that the Fed has received three unanimous dissenting votes in a single policy decision.

The investment bank's words: Central banks cannot withdraw from unorthodox monetary policy, and the price of gold will rise to $5,500!

Oct 26, 2021 10:58

The Fed may plan to reduce the size of monthly bond purchases before the end of the year, which continues to put pressure on gold, which is still trading at around US$1,760 per ounce. However, Jefferies Group believes that in the long run, gold prices will continue to rise by thousands of dollars.



In a report released on Tuesday, Jefferies stated that gold and Bitcoin are still essential hedging tools because the threat of stagflation (a low-growth, high-inflation environment) continues to grow.

Although the market is still struggling recently, Jefferies analysts said they insisted on their long-term forecast of gold prices rising to $5,500 . However, they also acknowledged that gold will remain vulnerable to tightening concerns in the short term.

Jefferies is still bullish on gold because central banks have found that it is easier to implement unorthodox monetary policy than to withdraw from monetary policy.

Jefferies analysts said: “G7 central banks, including the most important Fed, will not be able to withdraw from unconventional monetary policy in a benign way, and will eventually continue to work on the expansion of the central bank’s balance sheet in some form. These The policy will make those central banks that pursue unconventional monetary policies increasingly lose their credibility and threaten the stability and integrity of the current legal tender system."

In addition to gold, the company also believes that with the devaluation of fiat currencies, the price of Bitcoin is likely to rise . The company's global portfolio of long-term global investors in U.S. dollars holds 5% of cryptocurrencies.

These analysts said: "The reason for the introduction of Bitcoin is that with the increasing evidence of the G7 currency devaluation policy, Bitcoin is clearly a legitimate choice to avoid risk capital seeking a store of value. It should be emphasized again. , Investments in gold and bitcoin are seen as insurance measures, not short-term transactions. This is a long-term investment portfolio that seeks to balance long-term risks and opportunities in the current global context."



Spot gold daily chart

GMT+8 At 9:08 on October 6, spot gold was quoted at US$1758.52 per ounce.

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