Equities, precious metals and cryptocurrencies have been on a tear during the last three weeks of 2023, and all eyes are now focused on the upcoming meeting of the Federal Open Market Committee (FOMC ), which is 11 days away. On Friday, the governor of the Federal Reserve Christopher Waller said that he favors an increase in the reference rate of a quarter of a point at the next meeting of the FOMC. Analysts believe that the current trajectories of the market will be dependent on the outcome of the next meeting of the Fed.
Markets Still on Edge Ahead of Fed Meeting Despite Equity, Cryptocurrencies, and Precious Metals Heading into 2023
On Saturday, January 21, 2023, at 2:45 pm Eastern Time, the global cryptocurrency market capitalization increased by 5.87% over the previous day and hovered around $ 1.06 trillion in value. The leading crypto asset, bitcoin (BTC), had climbed 11.63% higher against the US dollar in the last seven days. The second major digital currency in terms of market valuation, ethereum (ETH), had risen 8.33% that week against the greenback. The increase in the value of these two crypto assets also increased the US dollar value of the thousands of digital currencies below BTC and ETH.
The day before, on Friday, January 20, the stock markets closed the day in the green. The top four benchmark stocks (S&P 500, Dow Jones, Nasdaq, and Russell 2000) ended the day between 1% and 2.66% higher against the US dollar. The Nasdaq Composite was the highest, up 2.66%, the S&P 500 rose 1.89%, the Russell 2000 index (RUT) jumped 1.69% higher, and the Dow rose 1% on Friday. So far this year US equities have posted a second consecutive week of gains. The RUT small-cap stock market index is up 7.1% this year, with small-cap stocks leading the stock race in 2023.
Precious metals also fared well with a troy ounce of gold trading at $1,927.30 per unit and silver trading at $24.01 per ounce. Like cryptocurrencies and stocks, the precious metals rose in 2023, erasing the losses that occurred in December 2022. Gold enthusiast Peter Schiff believes that the price of the precious yellow metal will grow taller this year. “Gold is now trading above $1,934, its highest price since April 2022,” Schiff he tweeted on the 19th of January. “Gold stocks, however, have not even taken last week’s high yet. In fact, gold stocks need to rise 30% from here just to get back to where they were trading in April 2022. This sale may not last long,” he added.
Speaking to Kitco News, OANDA senior market analyst Edward Moya detailed that gold prices will remain indifferent until the Federal Reserve meeting in February 2023. “It will be stripped,” Moya said. . “I am neutral on gold until the Fed meeting on February 1. Key resistance is at $2,000. But I would be surprised if we move above $1,950. We will probably consolidate here until the Fed meeting ,” the market analyst added. Market analysts and macroeconomic experts have no idea what the Fed will do at the FOMC meeting. Some believe it will continue a schedule of ‘aggressive tightening, while others expect the Fed to ease up and turn with a “soft landing”.
The Biden administration and White House economist Heather Boushey told Reuters that current leaders do not expect a recession. “The steps have been taken and it seems that we are in a very good position to have that soft landing that everyone talks about,” insisted Boushey. On Friday, the Governor of the Federal Reserve Christopher Waller told reporters at a conference of the Council on Foreign Relations in New York that he favors an increase in rates smaller than the previous seven. So far, the Fed has implemented seven rate hikes in 2022, two of which were half-point increases and five were three-quarter point increases. Waller could foresee a quarter-point hike at the next FOMC meeting next month.
“I currently favor a 25 basis point hike at the next FOMC meeting at the end of this month,” Waller told the press. “Beyond this, we still have a considerable way to go towards our goal of 2 percent inflation, and I expect to support the continued tightening of monetary policy,” added the Fed governor.
It is quite likely that all three major markets (precious metals, cryptocurrencies, and stocks) will react in one way or another after the Fed’s next decision. Many believe that the decision of the next FOMC meeting will be completely dependent on the measurement of inflation. US President Joe Biden has been bullish about the US economy over the weekend as he believes the country is on the road to recovery. “Annual inflation has fallen for six straight months and gas is down $1.70 from its peak,” Biden he tweeted Saturday morning at 10:25 am Eastern Time. “We are successfully moving from economic recovery to stable growth,” Biden added.
What do you think the outcome of the next FOMC meeting will be and how do you believe it will affect the current market trajectories for equities, precious metals and cryptocurrencies? Let us know what you think about this topic in the comments section below.
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