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Gold Prices React to Powell Re-Nomination, BoE Issues an Inflation Warning & Bitcoin Approaches a 5-Week Low

Gold prices drops over $40 on Powell re-nomination

Gold prices were down by as much as $42 on Monday, as markets reacted to the news that President Biden had chosen Jerome Powell as his nominee for Fed chair.

After months of speculation, the U.S president opted to remain with the current Federal Reserve regime, selecting Powell and vice chair Brainard for another 4 years.

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In a statement regarding the decision, Biden stated that, “We need stability and independence at the Federal Reserve – and I have full confidence after their trial by fire over the last 20 months that Chair Powell and Dr. Brainard will provide the strong leadership our country needs”.

XAUUSD fell to an intraday low of $1,804.81 on the news, which is its lowest level since November 5th.

The S&P 500 also rallied to a new high on the reports and was up 0.36% as of writing.

Sterling slides as BOE give inflation warning

GBPUSD fell to start the week, as Bank of England governor Andrew Bailey gave his assessment on the current impact of inflation in the UK.

Speaking over the weekend, Bailey stated that, “You’re in a fairly febrile world … the inflation picture is two-sided. There are risks both ways. Obviously, our concern would be that if it gets into second-round effects, it could be elevated for longer”.

💡 Inflation is at a 10 year high
Inflation in the UK unexpectedly reached a 10 year high just a few days ago. As the world faces a rising cost of energy and consequently consumer goods governments around the world must think quick.

The Bank of England has been monitoring a confluence of crucial data points as inflation remains persistently high while economic growth moderates and labor conditions tighten. Wednesday’s data will surely add more pressure on the Bank to act at its December meeting.


The head of the BOE went on to add that, “If the economy evolves in the way the forecasts and reports suggest, we’ll have to raise rates. Which, by the way, is entirely consistent with what I said in October”.

Many were surprised when Bailey and the MPC voted to keep rates unchanged earlier this month, as inflation rates surpassed the banks’ targets.

GBPUSD fell to an intraday low of 1.3385 on the news.

Bitcoin price approaches 5-week low

Bitcoin prices fell for the 6th consecutive session to start the trading week, with prices now near their lowest in over a month.

BTCUSD fell to an intraday low of $56,474, with many anticipating a drop could see prices fall to below $50,000 this week, if bears maintain this recent pressure.

Many also believe that with the vote of confidence handed onto the current Federal Reserve chair Powell, by President Biden, has led to investors choosing stock over crypto to start the week.

💡 Crypto vs Stocks
As crypto trading continues to consolidate itself as a strong option for traders, many people have started to wonder which is better. Crypto or stocks

Stocks offer more diversity (between 50% – 70% of crypto trading is tied up to bitcoin) while crypto offers its users more volatility, where an alt coin can jump over 1,000% in a span of a few days. Depending on your preference for risk and knowledge on the matter we always suggest people study thoroughly before making a decision.

Ethereum was down on Monday, trading 4% lower, with Cardano and Solana also lower, falling between 4-5% respectively.

Overall, the crypto market was down 3.75% as of writing.

“In investing, what is comfortable is rarely profitable.”

– Robert Arnott

Eliman Dambell

Senior Market Analyst

 

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