Dollar Dumps, Gold Jumps


From Tyler Durden: In a quite notable reversal of his rhetoric from a month ago, Fed Chair Powell seems to have abandoned his hawkish “long way” from neutral messaging…

Noting in his speech today that The Fed is “just below” the neutral range. The dollar dumped on this…

And as the dollar drops, gold pops…

Bond yields tumbled…

And stocks surged…

As Bloomberg’s Brendan Murray notes, there are the key takeaways from Powell’s prepared text:

  • Powell says rates ‘`just below’ range of estimates for neutral policy, raising the question of whether he’s walking back an earlier view that neutral was a longer way off
  • He says even after eight hikes since December 2015, rates are still low by historical standards
  • Powell explains Fed’s gradualism, saying the approach is meant to balance risks of moving too fast or too slowly
  • Powell says moving too fast would risk shortening U.S. expansion, moving too slow could risk higher inflation and destabilizing financial imbalances
  • Says the effects of Fed’s gradual hikes is uncertain, may take a year to realize
  • Powell sees `great deal to like’ about U.S. economic outlook, says he and FOMC are forecasting `continued solid growth’
  • Much of Powell’s speech dealt with financial stability, rating the overall risks “moderate”

The SPDR Gold Shares (GLD) was trading at $115.80 per share on Wednesday afternoon, up $0.85 (+0.74%). Year-to-date, GLD has declined -6.35%, versus a 2.40% rise in the benchmark S&P 500 index during the same period.

GLD currently has an ETF Daily News SMART Grade of B (Buy), and is ranked #1 of 35 ETFs in the Precious Metals ETFs category.

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