Today, the minutes of the FOMC April meeting were released. They said members of the Federal Reserve said they were more transparent about their future direction of interest rates. The Fed minutes, coupled with yesterday’s testimony from President Powell and Treasury Secretary Stephen Mnuchin, continue to strongly support gold prices.
The testimony as well as the Congressional Oversight Commission report underscored the large amount of monetary spending in response to the pandemic that shook the world on two fronts.
The first is the effect on millions of people who have contracted the disease. According to BBC News, the total number of cases of Covid-19 virus currently stands at 4,891,785, and the number of deaths is currently 324,496. The United States has reported that the total number of people infected is rising now at 1,529,123, of which 91,992 souls have died in the United States due to the pandemic.
The second effect is the economic impact of the pandemic. At the start of the pandemic, it was reported that more than 90% of the population of the United States was subject to mandatory foreclosure. However, across the country, state by state, many states are now easing their stay-at-home orders, and we’re allowing some companies on a limited basis to start reopening.
It is unclear whether the decision to relax the stay-at-home order or the reopening of businesses will or will not trigger a second wave of new cases in the pandemic. However, regardless of the end of this pandemic, the economic repercussions caused the worst global recession since the Great Depression of the 1930s.
According to the International Monetary Fund, the world economy is expected to contract by at least 3% this year. According to IMF chief economist Gita Gopinath, “the crisis could drop $ 9 trillion (£ 72 trillion) in world GDP over the next two years.”
In other words, even after the pandemic has run its course, the economic implications will continue to affect economies globally for years to come.
Gold has now appreciated in six of the last seven trading days. With the exception of Monday’s sharp drop, gold prices have posted gains since May 11, when gold was trading at around $ 1,700 an ounce. At 4:05 p.m. EST, the most active contract in June is currently trading at $ 5.50 and is set at $ 1,751.10. This is a gain of approximately $ 50 since May 11.
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