Precious Metals talking points 020124: quick comment: banking stresses re-emerging

Precious Metals Talking Points:  powell, employment numbers boost gold

Jay Powell put a lot of emphasis on employment during the Press conference following the FOMC meeting on Wednesday.  In the Q&A he was asked whether a slide in employment would likely lead to cutting rates sooner; he was emphatic in his response.  Strong body language and the use of the word “Absolutely”.  Less than 24 hours later, the US employment figures were weaker than expected with continuing claims up to 1.90M from 1.83, and initial jobless claims were 224k after 214k; the rise in labour costs was way below expectations at 0.5% against a call of 1.2%, as productivity increased.

The combination of his comments and these numbers was enough to propel a 2.7% ($35) rally in gold to test $2,065 before correction to $2,055 where it is looking to stabilise.

Meanwhile in the meeting itself: -

The markets never were expecting change in rates in the January meeting.  Prior to this meeting the bond markets were discount an 87% chance of a 50 point cut in May; now hey are looking at a 99% chance of a 25-point cut.

Key points from the Statement: -

  • Economic activity expanding at solid pace
  • Job gains moderated since early last year but remain strong
  • Inflation has eased, but remains elevated.
  • Economic outlook uncertain.
  • Committee does not expect it will be appropriate to reduce target range without greater confidence of inflation moving sustainably towards 2%.

Press Conference

Economy has made good progress towards the dual mandate objective.

FOMC will continue to significantly reduce securities holdings (already reduced by $1.3Tn over the past two years; currently at $4.7Tn).

Policy rate is “well into restrictive territory”; risks to achieving employment and inflation goals are moving into better balances.

High interest rates appear to have been weighing on business fixed investment.

Labour demand still exceeds the supply of available workers.

Inflation has eased notably but is above the long term goal; core PCE up 2.9% in December.  The lower readings in H2 are welcome but FOMC needs “continuing evidence” to build the necessary over inflation and the 2% goal.

If the rate is at its peak for this cycle and if “the economy continues to evolve broadly as expected it will likely be appropriate   to begin dialling back policy restraint ats some point this year.


The economy has surprised forecasters in many was since the pandemic and ongoing progress towards 2% is not assured.  The FOMC is prepared to maintain the current target rate for longer, if appropriate.  Moving too soon or by too much  would risk a subsequent reversal of the progress in reducing inflation and possibly even tightening.


What are they looking for in order to gain that necessary confidence?

                They have confidence and it’s increasing but they want more.  Need more good data (not necessarily better, but a continuation of the good solid numbers).  The past six months’ inflation numbers are good, but the FOMC wants to ensure it’s not a one-off.

A year ago they thought they would need softening in economic activity, but that has turned out not to be the case so they don’t see strong growth or strong labour market as problems.

Given that the rapid rise in rates seems to have been predicated on) avoiding a wage-price spiral , and b) risks of inflation expectations becoming “unanchored”;  since those hurdles have been avoided, what is there to gain by waiting further with policy rates above 5%?

                Almost every Committee participant does believe that it would be appropriate to reduce rates.  they are trying to identify a point at which they are sufficiently confident in the inflationary trend that they can begin the process of dialling back.  December dot plot; the median participant wrote down three rate cuts this year.  We don’t know where the neutral rate of interest is at any given time”

Would a slide in employment bring them to the point of cutting rates?

                Yes.  If they saw an unexpected weakening in employment that would ”certainly weigh on cutting sooner.  Absolutely.  Higher or stickier inflation would point to cutting later.

What was the level of unanimity in the meeting?

                There was no proposal to cut rates, although there is a healthy disparity of views, which is essential for making good policy.


Related tags: Precious Metals

The StoneX Group Inc. group of companies provides financial services worldwide through its subsidiaries, including physical commodities, securities, exchange-traded and over-the-counter derivatives, risk management, global payments and foreign exchange products in accordance with applicable law in the jurisdictions where services are provided. References to over-the-counter (“OTC”) products or swaps are made on behalf of StoneX Markets LLC (“SXM”), a member of the National Futures Association (“NFA”) and provisionally registered with the U.S. Commodity Futures Trading Commission (“CFTC”) as a swap dealer. SXM’s products are designed only for individuals or firms who qualify under CFTC rules as an ‘Eligible Contract Participant’ (“ECP”) and who have been accepted as customers of SXM. StoneX Financial Inc. (“SFI”) is a member of FINRA/NFA/SIPC and registered with the MSRB. SFI is registered with the U.S. Securities and Exchange Commission (“SEC”) as a Broker-Dealer and with the CFTC as a Futures Commission Merchant and Commodity Trading Adviser. References to securities trading are made on behalf of the BD Division of SFI and are intended only for an audience of institutional clients as defined by FINRA Rule 4512(c). References to exchange-traded futures and options are made on behalf of the FCM Division of SFI . StoneX is a trading name of StoneX Financial Ltd (“SFL”). SFL is registered in England and Wales, Company No. 5616586. SFL is authorized and regulated by the Financial Conduct Authority [FRN 446717] to provide to professional and eligible customers including: arrangement, execution and, where required, clearing derivative transactions in exchange traded futures and options. SFL is also authorised to engage in the arrangement and execution of transactions in certain OTC products, certain securities trading, precious metals trading and payment services to eligible customers. SFL is authorised & regulated by the Financial Conduct Authority under the Payment Services Regulations 2017 for the provision of payment services. SFL is a category 1 ring-dealing member of the London Metal Exchange. In addition SFL also engages in other physically delivered commodities business and other general business activities which are unregulated and not required to be authorised by the Financial Conduct Authority. StoneX Group Inc. acts as agent for SFL in New York with respect to its payments services business. StoneX APAC Pte. Ltd. acts as agent for SFL in Singapore with respect to its payments services business. ‘StoneX’ is the trade name used by StoneX Group Inc. and all its associated entities and subsidiaries.


Trading swaps and over-the-counter derivatives, exchange-traded derivatives and options and securities involves substantial risk and is not suitable for all investors. Past performance of any futures or option is not indicative of future success. Indicators are not a trading system and are not published as a specific trade recommendation. The information herein is not a recommendation to trade nor investment research or an offer to buy or sell any derivative or security. It does not take into account your particular investment objectives, financial situation or needs and does not create a binding obligation on any of the StoneX group of companies to enter into any transaction with you. You are advised to perform an independent investigation of any transaction to determine whether any transaction is suitable for you. No part of this material may be copied, photocopied or duplicated in any form by any means or redistributed without the prior written consent of StoneX Group Inc.


© 2024 StoneX Group Inc. All Rights Reserved.

Discover more insights

Our subscribers have access to comprehensive market analysis from StoneX spanning commodities, equities, currencies and more.
See why StoneX is a partner of choice

Let’s get connected

To learn more about how our customized financial solutions can help you stay one step ahead in the global markets, contact our team today.

Select your Location

Contact us


By submitting this form, you are sending StoneX Group Inc. and its subsidiaries your personal information to be used for marketing purposes. View our  Privacy policy  to learn more.