cryptocoin.com As we have also reported, the price of gold and Bitcoin (BTC) fell sharply after Federal Reserve Chairman Jerome Powell and Treasury Secretary Janet Yellen testified before the US Senate Banking Committee. Gold lost about $40 and retreated from $1,811.40 to $1,772.20, while BTC fell from $59,170 to $55,875.
Gold depreciated by about $40 with the Fed Chairman’s statements
When Jerome Powell spoke of more aggressive tapering and more problematic inflation, the yellow metal’s price dropped and it sounded more hawkish than before. Jerome Powell told the US Senate that the US central bank will consider completing tapering a few months before June:
At our next meeting, it would be appropriate to discuss whether to complete our asset purchases a few months ago. We saw high inflation pressures, strong labor market data, strong spending data. Every dollar of asset purchases increases the settling of inflation. The US economy is strong and inflationary pressures are high.
Jerome Powell stated that it is best to abandon the term “inflation is temporary” at this point, adding that the risk of more permanent inflation is higher:
The threat of consistently higher inflation has grown. We will use our tools to make sure higher inflation doesn’t settle in. We can now see that higher inflation continues until the middle of next year.
“We couldn’t anticipate supply-side issues. That’s what we missed.” The Fed Chairman said that what is overlooked in inflation is supply problems. In response to Jerome Powell’s statement, gold fell nearly $40 from its daily high of $1,811.40 to $1,772.20. At the time of this writing, December Comex gold futures were trading at $1,780.50, down 0.26% on the day.
Janet Yellen: Uncertain where we will be on December 15
Jerome Powell also touched on the risks surrounding the new Omicron variant, noting that it poses downside risks to employment, economic growth and inflation:
Further concern about the virus may reduce people’s willingness to work in person. This could slow labor market progress and intensify supply chain disruptions.
The Fed Chairman also announced that the central bank’s highly anticipated discussion paper on the Central Bank Digital Currency (CBDC) will be released in the coming weeks.
Janet Yellen testified with Powell, highlighting the debt limit issue and warned that failure to act on time could lead to a deep recession:
In a few days, the majority of Americans will be in financial distress as critical payments such as Social Security checks and military paychecks will not reach their bank accounts, and a deep recession will likely follow.
Treasury Secretary Janet Yellen highlighted December 15 as the deadline for monitoring:
Where we will be on December 15 is uncertain. There are scenarios where the Treasury will not have sufficient funds to continue financing the US government’s operations after that date.
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