The yellow metal, on Mar 25, recoiled from this week's low, shooting higher after encouraging comments from Jerome Powell, the chairman of the U.S. FED. He remains confident in economic recovery, hinting that they will eventually slow down purchasing treasury yields and mortgage-backed securities. Currently, the central bank purchases $120 billion worth of bonds every month. This, in turn, raises inflation concerns and highlights the economy's bad state, which then supports gold's prices. However, this will depend on the economy's health and stability.
Gold is a safe-haven, an asset that investors flow to during times of economic turmoil. In 2020, gold soared to over $2k, rising to a 20-year high to levels last seen in 2001. As the economy recovers, gold often loses its shine as investors break away, unfreezing their cash in a risk-off environment. Jerome's comments, therefore, citing the faster-than-expected economic recovery, the success in the administration of COVID-19 vaccines, and lower inflation, could weigh down gold.
Impact on gold:
Bearish. A stronger U.S. economy would heap pressure on the gold price. It explainsCNBC'sJim Cramer's recommendation ondumpingthe yellow metal for BTC, saying it has "let him down" and has too 'many vicissitudes'.
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