Gold and silver prices are posting solid gains in early U.S. trading Thursday. It appears the marketplace is breathing a sigh of relief following the Federal Reserve’s FOMC meeting Wednesday afternoon that did not lean as hawkish on U.S. monetary policy as many market watchers had feared. June gold futures were last up $30.90 at $1,899.90 and May Comex silver was last up $0.583 at $22.95 an ounce.
Traders Thursday are still digesting the Federal Reserve move Wednesday afternoon to raise its key interest rate, the Fed funds rate, by 0.5%, which was expected by the marketplace. The rate hike is the first 0.5% increase in 22 years and comes amid the highest U.S. inflation levels in 40 years. The FOMC statement said the Fed will continue to raise interest rates as appropriate. At Fed Chairman Jerome Powell’s press conference, the Fed chief said inflation levels are “much too high” and are presently spreading in the economy but are likely to stabilize soon. However, Powell added that he does not see inflation declining any time soon. Importantly, Powell said the U.S. central bank is not considering 0.75% rate increase increments. He did say 0.5% rate increases are on the table for the next two meetings. On the positive side, Powell said the U.S. economy is strong and well positioned to handle the upcoming Fed interest rate increases. The marketplace’s read on the statement was dovish on U.S. monetary policy. Others might argue the FOMC statement and Powell’s remarks were just less hawkish than previous recent remarks from Federal Reserve officials.
Global stock markets were mixed overnight, with European shares mostly up and Asian shares mostly down. U.S. stock indexes are pointed toward lower openings when the New York day session begins, on corrective pullbacks after strong gains posted Wednesday afternoon. U.S. stock indexes Wednesday afternoon soared on the Fed news, gold posted solid gains and bitcoin and crypto currencies rallied sharply, too. However, the U.S. stock indexes have quickly lost their sizzle as many market watchers reckon not much has really changed regarding overall Fed policy.
The Bank of England is at its regular monetary policy meeting raised its interest rate by 0.25%. The BOE raised its annual inflation forecast significantly, to 10.25%. A rate hike was expected but the inflation forecast was a surprise on the upside.
Traders and investors are now awaiting Friday morning’s U.S. employment situation report for April. The key non-farm jobs number in the report is expected to come in at up 400,000, which compares to a rise of 431,000 in the March report.
The key outside markets today sees Nymex crude oil futures prices up and trading around $109.50 a barrel. Meantime, the U.S. dollar index is solidly higher in early trading after selling off Tuesday afternoon. The yield on the 10-year U.S. Treasury note is presently fetching 2.966%. The 10-year yield early this week briefly hit a 3.5-year high just above 3%.