Chairman Powell sets the record straight, no rate hike for at least two years | The Gold Forecast

Chairman Powell sets the record straight, no rate hike for at least two years

March 17, 2021 - 6:07pm

 by Gary Wagner

In the words of ‘Hans and Franz,’ characters from a Saturday Night Live skit by Dana Carvey and Kevin Nealon, Fed Chairman Jerome Powell wants to pump … you up, America.”

Today this month’s FOMC meeting concluded, in both the statement as well as the words spoken by Chairman Powell made it emphatically clear that the Fed has no intention whatsoever to raise interest rates until 2022, or 2023.

This was made crystal clear by releasing their latest “dot plot,” which showed a unanimous decision to leave rates between zero and 25 basis points throughout 2021. It showed that the majority vote also believes the best course of action is to keep interest rates where they are in 2022 and 2023. There were only four dissenters who believe that they should raise rates in 2022 and seven dissenters who believe they should raise rates in 2023.

Chairman Powell acknowledged some positive news on the economy as he forecast that GDP will move from 4.2% to 6.5% by the end of the year. He stated that they would continue their quantitative easing by purchasing $120 billion worth of assets each month and will continue this process for the next couple of years.

He did not speak about any action the Fed might take due to the rising yields in U.S. Treasury notes. Many analysts had hoped he would address this in a similar manner to QE 3, which was also called operation twist, in which they bought and sold bonds with different maturity timelines.

The main takeaway was the commitment by the Federal Reserve that the actions by the Fed in regards to the economy will be solely based upon the pandemic rather than solid economic data. He also made it clear that the dual mandate of maximum employment and an inflation rate of 2% has been adjusted so that their dual mandate is more a single mandate of full employment as he acknowledged that he expected inflation to run as high as 2.5% this year.

His statements were much stronger than his last public appearance during a Wall Street Journal webinar, continuing to underscore the Federal Reserve’s commitment to be patient and to maintain the current policy even though the economic outlook has absolutely improved over the last 4 to 6 months.

Market participants and traders were exceedingly pleased by his press conference, which sparked a tremendous rally in both U.S. equities as well as gold and silver prices. The fact that he is projecting the economy to grow and unemployment to lessen, coupled with the fact that he has no intent on changing the monetary policy, signaled that the Fed would continue to be extremely dovish over the next few years, even as economic data improves. He stated that that they will continue their current policy until the economy not only rebounds but returns to pre-pandemic days.

Gold basis, the most active April 2021 contract, gained $13.10 today, a 0.76% gain taking current pricing to $1744. Silver also gained 1.57% and is currently trading at $26.41. All of the major indexes were also higher. The rally in both risk-on and safe-haven assets is signaling that a combination of massive fiscal stimulus coupled with an extremely accommodative Federal Reserve will move both of those asset classes in tandem to higher prices.

Gary S. Wagner - Executive Producer

This report is now free and publicly available to everyone

Gold Forecast: Proper Action

On March 10th we issued trade alert to buy gold and silver.

On March 16 we raised stops to

Futures: GC 1690. SI 25.3 ----- Forex: . XAUUSD 1690. XAGUSD 25.3 -------- ETF's: GLD 159.35. SLV 23.5

Futures contracts:
Buy April 2021 gold (GC J21) @ the market current $1722.80. Place stop at $1690
Buy May 2021 (SI K21) @ the market current $26.26. Place stop at $25.30

Electronically Traded Funds:
Buy GLD at the market current $161.55. Place stop at $159.35
Buy SLV at the market current $24.24. Place stop at $23.50

Forex / spot markets:
Buy Forex gold @ the market current $1724.40. Place stop at $1690
Buy Forex silver @ the market current $26.17. Place stop at $25.30

On February 18 we entered a long April Platinum trade. In at $1282. Our stop was hit today (02/26/21) @ at $1217.00
SILVER FUTURES MARCH: Entry at $27.36, and then closed the trade later @ $27.45.
XAGUSD: Entry at $27.26,, our stop was hit at $27.39

We closed our positions in SLV:
First leg SLV: @ 22.95 .out at @ $24.99
Second leg SLV @ 24.60. out at @ $24.99

On Thursday February 4 stops were hit on our long GLD ETF. We entered at 172.14. Our stop was hit at $168.29 (the open on Thursday) for a $3.85 loss per share.

GOLD FUTURES APRIL: Entry at 1845 - 1859 . Stop hit at 1813 - average loss $3900 per contract
XAUSUD: Entry at 1845 - 1857 . Stop hit at 1813 - average loss of $38 per oz
SILVER FUTURES MARCH: Entry at 25.42 - 25.46 . Stop hit at 24.11 - average loss $6650 per contract
XAGUSD: Entry at 25.33 - 25.40 - Stop hit at 24.11 - average loss $1.3 per oz
long February gold @ $1890.00 and stop hit @ $1902.20, for a profit of $1202.00 per contract
long Forex gold @ $1886.00 and stop hit @ $1898 for a profit of $12.00 per OZ
long March silver @ $26.31 and stop hit @ $26.41 for a profit of $500.00 per contract
long GLD @ $177.26 and stop hit @ $178.00 for a profit of $0.71 per share
long SLV @ $24.67 and stop hit @ 25.00 for a profit of $0.33 per share
long February Gold Futures at $1860-$1866 and stop hit at at $1869. Average profit $600 per contract
long XAUUSD at $1856-$1862 and stop hit at $1866. Average profit $6
long March Silver Futures at $25.16 - $25.25 and stop hit at $25.30. Average profit $450 per contract
long GLD @ $174.12 and stop hit at $175.78 for a profit of $1.66 per share
long GLD @ $174.12 and stop hit at $175.78 for a profit of $1.66 per share
long February Gold Futures at $1830 -$1843 and out at $1850 for a profit of $700 to $2000.00 per contract
long XAUUSD at $1841 and out at $1850 for a profit of $90.00 per mini 10 oz contract
long March Silver Futures at $24.29 and out @ $24.40 for a profit of $550.00 per comex contract
long GLD @ 1$71.50 and out @ $173.00 for a profit of $1.50 per share
long SLV @ $22.30 and out @ $22.50 for a profit of $0.20 per share
Long December gold at $1899. Stop hit at $1918, for a $1900 profit
Long forex gold at $1896.00. Stop hit at $1912, for a $1600 profit
Long December silver at $24.21. Stop hit at $25.07 for a $4300 profit
Long GLD at $180.46 and stop hit at $176.42 for a loss of $4.04 per share
Long SLV at $23.23 and stop at $22.78 for a loss of $0.40 per share
Long December Gold Futures at $1926 and stop hit at $1907.30 for a loss of $18.70 per ounce
Long Forex Gold at $1922 and stop hit at $1903 for a loss of $19.00 per ounce
Long December Silver Futures at $25.13 and stop hit at $24.73 for a loss of $0.40 per ounce
Long December gold at $1890, out at $1909.30 for a profit of $1,930.00
Long December silver at $23.95, out at $24.50 for a profit of $2,750.00
Long Forex gold at $1883.68, out $1907 for a profit of $23.32 per ounce
Long GLD ETF at $178.03, out at $179.80 for a profit of $1.77 per share
Long SLV ETF at $22.66, out at $22.03 for a loss of $0.63 per share

Gold Market Forecast

Today’s FOMC meeting, the release of the Fed statement, along with word spoken during the press conference by Chairman Jerome Powell emphatically gave clarity to the current stance and future monetary policy. Without mincing words interest rates will remain where they are probably till 2023. Market participants absolutely liked what they heard, resulting in a dynamic rally in both US equities and gold and silver. As of 6:44 PM EST gold is currently trading at $1747.90 which is a net gain of $20.80 on the day. It is actively trading Thursday morning on Australia and continues to challenge today’s intraday high of $1450. This is the fundamental confirmation that our technical studies indicate that could occur.

On the last few shows we have spoken about our upside target specifically in gold, in which our studies indicate that we could see gold trade as high as $1880 before finding any real resistance. While we moved our sops up yesterday after today’s dynamic climb we will look for the first opportunity to raise our sops and lock in profits. Today’s video is an interview that was done with Kitco’s David Lin this morning and covers not only my fundamental beliefs but our technical studies.

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