'Wall Street's favorite trade': Gold price at $2k on banking turmoil fears, hopes of Fed pause gold Fed economy
The gold market is attracting new buyers, pushing prices to $2,000 an ounce Thursday on fears of further banking turmoil and hopes of the Federal Reserve pausing.
When reporters grilled Powell on what this new Fed speak means, the Fed chair replied:"We no longer state that ongoing rate increases will be needed to quell inflation … Events in the banking system over the past two weeks are likely to result in tighter credit conditions for households and businesses, which would, in turn, affect economic outcomes."
"Gold is becoming a favorite trade on Wall Street as many traders remain nervous post-Fed and over how quickly will U.S. authorities be able to contain further banking turmoil," said OANDA senior market analyst Edward Moya."Gold is going to shine here, and it seems positioned to find a home above the $2,000 level. A run to record territory is not that far away."
The key question on everyone's mind is whether Washington is willing to back all U.S. bank deposits after sudden outflows contributed to the collapse of several U.S. regional banks. The current Federal Deposit Insurance Corp insurance limit is $250,000. Despite the uncertainty of what will happen with the banking sector turmoil, gold's risks are to the upside, especially with growing expectations of rate cuts by the end of the year, said TD Securities senior commodity strategist Daniel Ghali.
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