All markets are focused on public statements by Fed officials this morning, looking for clues on the timing of the Federal Reserve’s next interest rate hike. Today is the last day that Fed officials can make public remarks ahead of the September policy meeting in eight days.
Gold prices were trading in a very tight channel overnight, as stocks in Asia and Europe continued falling and Wall St opened lower this morning, but ran into some tepid selling pressure after Atlanta Fed president Dennis Lockhart told reporters that there should be a lively discussion next week on raising interest rates. Silver prices are near unchanged, rising after a minimal selloff in Europe overnight.
US stocks are attempting to recover from one of the worst days this year on Friday. Substantial losses ahead of this morning’s bell on Wall St. Federal Reserve Board of Governors member Lael Brainard’s speech today in Chicago could hold the key to market movements ahead of the FOMC statement on the 21st. A long-time dovish member of the Fed, if Brainard makes any statement at all that a September rate hike may be on table will crush stocks and bonds.
Oil prices are down for a second day, as speculators are pushed to close their positions by a stronger dollar. News Friday that Baker Hughes reported that seven more oil rigs came online last week, and noises from OPEC members that cast doubt on an oil production freeze, had crude prices plummeting.
Growing chances of a Fed rate hike are combining with fears that extreme policies by the ECB and BoJ are increasingly ineffective, leading to a global rout in sovereign debt.
While stocks, bonds, and oil were plunging on interest rate fears Friday, an experienced fund manager who has compared gold to wampum announced that he was buying gold for his clients. When asked about the about-face, he answered “You buy real assets when inflation expectations are starting to go up.”
If even a gold hater will buy gold for its performance as an inflation hedge, isn’t it time to think about it yourself?
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