Powell Sends a Message With Love for Gold

Gold last traded at $1,750 an ounce. Silver at $17.99 an ounce.

NEWS SUMMARY: Precious metal prices rose Wednesday amid economic uncertainty and a sharply lower dollar. U.S. stocks rose on upbeat retail earnings, as traders continue to grapple with market volatility this week.

 FX EMPIRE/YAHOO FINANCE---"Jerome Powell gave a speech yesterday at the Peterson Institute for International Economics. The Fed Chair acknowledged the unprecedented depth of the coronavirus crisis, and its disastrous impact for the US labor market....There are three key takeaways from Powell's speech...1) The Fed Chair rejected the idea of negative interest rates. He noted that the evidence on the effectiveness of these monetary policy experiments conducted by the Bank of Japan and the European Central Bank 'is very mixed'....2) Powell acknowledged...the V-shaped rebound is unlikely and there are important downside risks on the way to recovery...'The path ahead is both highly uncertain and subject to significant downside risks.' These grim words pushed the stock markets down on Wednesday. Importantly, Powell noted that the longer the recession takes, the more problematic it might become, as 'the passage of time can turn liquidity problems into solvency problems.' The implication is that the safe-haven demand for gold should remain robust for a while, and gold is still a good portfolio's diversifier....3) Powell suggested that the Fed's policy toolkit could expand in the future. He said that while the Fed's response to the crisis 'has been both timely and appropriately large, it may not be the final chapter'....It means that we could see more fiscal deficits and even higher federal debt in the near future."