Top Stories This Week: Gold Rebounds as Fed Rises, Recession Questions LoomYoutube
The US Federal Reserve met for two days this weekmarket watchers eagerly awaiting the outcome.
The central bank was expected to announce an interest rate hike, and that’s exactly what happened — it raised the policy rate for the first time since 2018, raising it by 25 basis points.
A number of top indices fell immediately after the news broke on Wednesday, March 16, including the S&P 500 (INDEXSP:.INX) and the Dow Jones Industrial Average (INDEXDJX:.DJI).
They were quick to recover, and InTheMoneyStocks.com’s Gareth Soloway told me that comments from Fed Chairman Jerome Powell after the meeting helped ease some initial concerns.
“I think the bottom line is that the Fed takes inflation seriously…it’s letting the market know that yes, it’s going to attack inflation, but we’re going to try not to overdo it” — Gareth Soloway, InTheMoneyStocks.com
Gareth’s main takeaway was that the Fed takes the fight against inflation seriously, but is also aware of the risks of going too far. Those risks of course include a recession, and despite Powell’s soothing words, the Fed’s actions this week have raised concerns about whether that could be in the cards.
It’s a valid concern, according to Gareth. He said we should have a better idea of what’s to come in the second half of the year; however, at the moment it sees a decent risk of a recession by Q4 or early 2023.
For its part, gold has seen highs and lows this week. The yellow metal started the period in the range of US$1,950 an ounce before pulling back on Tuesday (March 15) and Wednesday to trade as low as US$1,907.
Once the announcement of the central bank’s rate hike was announced, gold recovered, but it had lost some strength at the end of the week. The metal was around US$1,920 at the time of this writing on Friday afternoon March 18th.
With the Fed meeting in mind, we asked our Twitter followers this week, how many rate hikes they now expect to see in 2022. At the close of the survey, most respondents answered one to two, with three to four coming in second. It should be noted that Fed officials “specified” six more bumps.
With so much going on right now, it’s hard to know where to focus. But we’ll conclude with nickel, which has seen a very interesting price development recently.
The metal surged last week to a record high of US$100,000 per ton, a massive price increase of 250%. Various factors were involved in the unprecedented gain, but chief among them was a short compression situation. The London Metal Exchange (LME) eventually halted trading and canceled trades made during the turmoil.
“What a debacle. The LME is doing itself a disservice” – Ole Hansen, Saxo Bank
The exchange then attempted to restart trading in the middle of this week, with price limits in place to control volatility; a technical problem forced yet another stoppage, but the Nickel was finally back in action on Thursday (May 17).
The story isn’t over yet, though – now experts are raising questions about how the exchange handled the situation, including whether it was right to rollback trades and whether price limits are a good thing. idea. It’s a situation investors will need to watch closely, especially if there are supply issues with the third-largest nickel producer, Russia.
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Securities Disclosure: I, Charlotte McLeod, have no direct investment interests in any of the companies mentioned in this article.
Editorial Disclosure: The Investing News Network does not guarantee the accuracy or completeness of the information reported in the interviews it conducts. The opinions expressed in these interviews do not reflect the views of Investing News Network and do not constitute investment advice. All readers are encouraged to perform their own due diligence.
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