Gold Prices And The Future of Janet Yellen At The Fed

Friday, August 25, 2017

gold and money

Regular reads of this space recall the importance of the Federal Reserve’s meetings on the strength of the U.S. dollar—and thus, the strength of the price of gold. The person with the most power to sway Federal Reserve policy, Chairperson Janet Yellen, has made recent headlines with a speech in Jackson Hole, Wyoming that some analysts are wondering might have been a swan song.

The Jackson Hole Speech and What It Means for Gold

According to Greg Robb, senior economics reporter at Market Watch, Yellen used her time in Jackson Hole to defend the measures taken during the Obama administration, especially in the wake of the ’07-08 financial crisis, now dubbed the Great Recession. It shouldn’t surprise readers that President Donald Trump and many conservative economists have viewed these regulations as stifling and troublesome, especially down the road.

The speech puts Yellen potentially at odds with the president as how to best handle the Federal Reserve in the future, not to mention economic policy as a whole. That has analysts wondering just how long Janet Yellen is going to continue to steer the Federal Reserve.

What does this mean for gold? It depends. If Yellen really did think her days at the Federal Reserve were numbered, what would really matter is who takes over for Yellen. But it bears watching, especially with a fresh quarter due up and Federal Reserve meetings looming on the horizon—though those may potentially be due in December.

Politics at the Top: Helping Gold’s Price in the Future?

As The Week notes, the situation at the top of U.S. politics—essentially, the headlines surrounding President Trump—have many investors clamoring for gold and looking for safe havens. Janet Yellen seeing low interest rates as a way to enhance stability in these uncertain economic times—despite the high price of the Dow Jones Industrial Average as it stands—could be good for those who want to see gold’s price continue to perform well.

As it stands this morning, markets across the board are generally optimistic. The Dow Jones is up slightly, as is the price of gold, which is at least hovering near the top $1,290-per-troy-ounce mark and looking to break through the psychological barrier of $1,300. If that happens, it may be setting us up for a successful second half of the year for the yellow metal.

Where the Federal Reserve Goes From Here

With Yellen signaling that she believes the Federal Reserve’s actions in the wake of the financial crisis of the previous decade have done much to stabilize markets, it sends a clear signal: Yellen likely believes that a conservative approach to raising interest rates is best. That could be good for the price of gold, as low interest rates tend to send investors looking for better stores for their wealth, like precious metals. There are those who believe the current market is actually in a bubble—a bubble in dire need of conservative fiscal policy—but that doesn’t appear to be in the cards for 2017.  

Darren Capriotti

Darren Capriotti has been a market analyst for the past decade and is an expert in precious metals. He prides himself on his ability to analyze the market and offer true value to investors with questions about gold, silver, and other precious metals. Highly educated, incredibly passionate, and more accurate than most, Darren offers a true, unbiased look into what investors can expect in the precious metals market. You can reach Darren at dcapriotti@gold-eagle.com.