This Week in Gold: Federal Reserve Activity at Forefront


This week in gold was dominated by news surrounding the U.S. Federal Reserve’s latest activities and investors’ interpretations and reactions in the markets. In the international headlines was more Russia/Ukraine armed conflict and terrorism by radical Islamist group ISIS. The economic and global landscape may be set for some major changes soon.

Top Central Bankers and Economists Meet in Jackson Hole, Wyoming

Central bankers and economists from around the world, including the U.S. Federal Reserve, met in Jackson Hole, Wyoming on Thursday-Friday for an annual summit. Many eyes were on Fed Chairwoman Janet Yellen as she gave a speech for her first time at the summit as chairwoman. She remarked that “the labor market has yet to fully recover” from the 2007-8 financial crisis, and reiterated the Fed’s earlier statements that the timing of interest rate hikes will depend on how quickly the economy continues to show signs of recovery. Gold and the stock market were little changed following the comments.

Fed Late-July Meeting Minutes Show Mixed Sentiments

Minutes from the U.S. Federal Reserve’s late-July policy meeting released on Thursday were mixed in terms of a possible earlier interest rate hike. Market reactions were mixed as well, as gold fell to a two-week low, bond yields dipped, and stocks and the U.S. dollar fell at first but then rallied. “The hawkish voices within the Fed have become louder. While the economic numbers are not very strong, they are definitely showing some strength,” said Jerry Webman, chief economist at OppenheimerFunds Inc. Noted in the minutes was that the unemployment rate has fallen from 8.1% to 6.1% since September 2012, monthly job growth has passed 200,000 for six straight months, the economy grew 4% in the second quarter of this year, and inflation may be reaching the Fed’s target rate of 2% “very slowly.”

Is George Soros Betting More Than $2B on a U.S. Stock Market Collapse?

Newsmax reports that billionaire investor and business magnate George Soros has upped his financial wager that U.S. stock market will suffer a collapse within the coming months. He now has a negative bet on the S&P 500 Index of $2 billion. Investors have been watching Soros up his ante since late last year. As of June 30, Soros raised his position to 11.3 million put options on the S&P 500 ETF (SPY), increasing the short position from 2.96% to 16.65%. The dollar value of the position has now reached $2.2 billion, up from around $299 million. Many experts see this positions as a wager that the stock market will crash, while others see it as possibly part of a long-term trading strategy.

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