The Magazine for Asian Investors
Gold futures closed slightly higher on Monday (March 21) after the gold price fell by a whopping 3.4% last week. Investors currently have to think about the extent to which the first interest rate hike and the situation in Ukraine will affect the global economy.
- The gold futures were up 20 cents, or 0.01%, at $1,929.5 per ounce.
- Silver futures were up 22.6 cents, or 0.9%, at $25.313 an ounce.
- The platinum contract was up $8.8, or 0.85%, to close at $1,044.7 an ounce.
- The palladium contract was up $44.30, or 1.8%, at $2,537.30 an ounce.
Fed Chairman Powell said yesterday at a meeting of the U.S. National Business Economics Association that the Fed is trying to stabilize prices through appropriate measures. These measures could also be larger interest rate hikes.
“We will take the necessary steps to ensure a return to price stability. In particular, if we conclude that it is appropriate to move more aggressively by raising the federal funds rate by more than (a quarter-point) at a meeting or meetings, we will do so.”
In addition, the Fed believes that a rise in interest rates could influence consumer behavior. The number of job openings in the U.S. is close to a record level with 11 million job openings in January. This in turn means that there are more jobs available than unemployed. He believes these circumstances are “out of balance” because they lead to higher wages for many. Powell hopes the rise in interest rates will curb this and reduce consumer spending.
“We need the labor market to be sustainably tight,”said Powell.
Powell’s point is that inflation also has to do with rising wages because if companies have to pay higher wages, they would also have to raise the prices of their goods.
Investors are also monitoring the situation in Ukraine. Statements from many sides gave a distorted picture of what was happening. While some media report that peace talks are progressing, Russian politicians say that no great progress has been made.
The Spot Market is Open
Tuesday, March 22, 2022