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Gold Closes Modestly Higher As Market Participants Await Two Key Events This Week

By:
Gary S.Wagner
Published: Apr 26, 2021, 21:59 UTC

However, the future direction of gold pricing is highly contingent upon two major events set to occur at the beginning of this week.

A few golden ingots

Gold futures basis the most active June 2021 Comex contract opened on Monday morning in Australia at $1777.60 and is currently fixed at $1781, after trading up $3.20 in New York.

Chart_21-04-26_10-54-28

The first major event occurring this week is this month’s FOMC meeting, which begins tomorrow, and concludes on Wednesday. As always, members of the Federal Reserve will meet to discuss their current monetary policy in regards to their Fed funds rate which is currently set between zero and ¼%, as well as their current asset purchase program which has been consistently buying $120 billion worth of treasuries and mortgage-backed securities.

It’s currently anticipated that Chairman Jerome Powell will not rock the boat in regards to raising interest rates or focusing too intently on the recent rise in yields of the U.S. 10-year treasury note.

As reported by MarketWatch, “When Federal Reserve Chairman Jerome Powell meets with officials next Wednesday to provide an update on the economy, there’s little expectation for any policy changes, but investors no doubt will be listening to his remarks for hints about what the recovery in employment or rise in inflation after the pandemic might mean for financial markets.”

One possible wildcard in terms of commentary to be made by Chairman Powell is the growing homeless encampment which is very close to his Washington DC office.

A Washington Post article penned by Rachel Siege, written on of April 17, begins with the following sentence, “As he drove past the intersection of 21st and E streets in Northwest Washington, a 68-year-old man peered through the window, struck by an encampment of homeless people here that grew from 10 tents to 20 in the past year. Then 30. Now 40.

The person driving was Chairman Jerome Powell, who it is believed has been “up at night, or that he kept thinking about them as he drove two blocks south to his office. Powell doesn’t know their names or backstories, either. But what he saw was clear. A visceral reminder of the uneven economic recovery. Right there in the Fed’s shadow.”

Her article ponders the following question concerning the most underserved citizens in the United States, “How can the Fed have done so much — slashed interest rates, propped up the stock market, bought up $3.3 trillion in Treasury’s and mortgage-backed securities — yet parts of the economy remain so broken?”

Obviously, this question has been on Chairman’s Powell a great deal lately having referred to the tent city three times in the last seven days which includes a recent 60-minute interview, a panel hosted by the International Monetary Fund, and finally during a talk to the Economic Club of Washington.

The second major event this week will begin on Wednesday and conclude on Thursday when president Joe Biden will hold his first address to Congress. Due to Covid-19 restrictions his address will be by invitation only, with a limited number of people residing inside the capital. This will be his first major address to congress since he took office on January 6.

This address will occur as he completes his first 100 days in office. Because of the pandemic president Biden did not address the Congress through the “The State of the Union”, a long-standing annual tradition. This yearly message is delivered by the president of the United States to the U.S. Congress near the beginning of each calendar year on the current condition of the nation.

It is widely believed that he will touch upon promises he made during his election, as well as focusing upon the $2.3 trillion infrastructure package he proposed earlier this month.

Collectively these two events could most certainly have a profound impact on the future price of gold. Both events could certainly underscore continued bullish market sentiment for the precious yellow metal.

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Wishing you, as always, good trading and good health,

Gary Wagner

About the Author

Gary S.Wagnercontributor

Gary S. Wagner has been a technical market analyst for 35 years. A frequent contributor to STOCKS & COMMODITIES Magazine, he has also written for Futures Magazine as well as Barron’s. He is the executive producer of "The Gold Forecast," a daily video newsletter. He writes a daily column “Hawaii 6.0” for Kitco News

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