Precious Metal Prices Surge As Pressure Piles On Fed To End Rate Hikes – What’s Next?

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Published: Oct 5, 2022, 12:35 GMT+00:00

Commodity prices across the board continued their explosive run higher amid growing expectations that yet another central bank is gearing closer to a major policy U-turn.

Commodities On The Rise This Week

This week, over 27 Commodities ranging from the metals, energies to soft commodities tallied up astronomical gains – with many notching up impressive double digit returns in the first week of October already – setting a precedent for the remaining quarter ahead!

US Dollar Strength and Fed’s Tightening Policies

After being criticized for being slow to recognize inflation, the Federal Reserve has embarked on its most aggressive series of rate hikes since the 1980s.

The Fed’s aggressive tightening policy has dramatically strengthened the dollar – raising concerns among leading economists that the U.S currency will be the next asset bubble to burst.

According to Morgan Stanley – “such U.S dollar strength has historically always ended in some kind of financial or economic crisis” and that’s the exact direction we are heading in again.

In recent months, a long list of Wall Street banks from Goldman Sachs, JPMorgan to Bank of America have warned that an overly aggressive Fed tightening policy, combined with a surging U.S dollar, risks breaking the global financial markets and causing dangerous instability in other currencies.

IMF and United Nations Already Alerting

This week, the International Monetary Fund and United Nations also joined the list – calling the Fed’s actions an “imprudent gamble” with the lives of those less fortunate. If the central bank doesn’t “course correct,” emerging countries will tumble into a series of debt crises and health and climate emergencies.

A Pivotal Moment for Central Banks and the Economy

Growing backlash against the Fed comes at a pivotal moment – following a significant move from The Bank of England, who reverted back to unprecedented “Quantitative Easing” measures, to avert a full-blown global financial meltdown.

In one of the most major U-turns in monetary policy, ever seen – The Bank of England went into full financial crisis mode last week, rushing out an announcement that the central bank was restarting its money-printing presses at “whatever scale is necessary” – officially confirming that “QE To Infinity” was back!

The UK bank’s extraordinary new round of quantitative easing will involve suspended a program to sell gilts – part of an effort to get rapidly surging inflation under control – and instead revert to buying long-dated bonds at a whopping rate equivalent to over $5.3 billion dollars a day.

Pressure is now piling on the Federal Reserve to follow the Bank of England’s lead and put a brake on rate hikes.

In fact, traders have already begun pricing in expectations that the Federal Reserve will raise interest rates just one more time in November before ending its quantitative tightening program.

Extraordinary times create extraordinary opportunities and right now, this market is a traders’ dream – packed with unlimited opportunities to generate huge profits FAST!