Stocks, precious metals, and cryptocurrencies have crashed in the last three weeks of 2023, and all eyes are now on the upcoming Federal Open Market Committee (FOMC) meeting, which is 11 days away. On Friday, Federal Reserve Governor Christopher Waller said he favored a quarter-point hike in the benchmark rate at the next FOMC meeting. Analysts believe that the market’s current trajectories will depend on the outcome of the next Fed meeting.
Markets still on edge ahead of Fed meeting despite rally in stocks, cryptocurrencies and precious metals in 2023
On Saturday, Feb. 21, 2023, at 2:45 p.m. EST, the global cryptocurrency market capitalization is up 5.87% from the previous day and hovering around 1.06 trillion. dollars in value. The main crypto asset, bitcoin (BTC), had climbed 11.63% against the US dollar in the past seven days. The second digital currency by market valuation, Ethereum (ETH), was up 8.33% that week against the greenback. The increase in value of these two crypto assets has also increased the US dollar value of thousands of digital currencies below BTC and ETH.
The day before, Friday Jan. 20, the stock markets closed the day in the green. The four major benchmark stocks (S&P 500, Dow Jones, Nasdaq and Russell 2000) ended the day between 1% and 2.66% higher than the US dollar. The Nasdaq Composite was the highest, up 2.66%, the S&P 500 rose 1.89%, the Russell 2000 Index (RUT) jumped 1.69% and the Dow rose 1. % friday. US stocks posted their second straight week of gains so far this year. The RUT small cap stock index has risen 7.1% this year, with small cap stocks leading the stock race in 2023.
Precious metals also performed well with one troy ounce of gold trading at $1,927.30 per unit and silver trading at $24.01 per ounce. Like cryptocurrencies and stocks, precious metals rallied in 2023, erasing the losses that took place in December. 2022. Gold enthusiast Peter Schiff thinks the price of the precious yellow metal will rise this year. “Gold is now trading above $1,934, its highest price since April 2022,” Schiff said. tweeted on Jan 19. “Gold stocks, however, still haven’t hit their high from last week. In fact, gold stocks need to rise 30% from here just to get back to where they were trading in April 2022. This sale may not last long,” he added.
Speaking to Kitco News, OANDA Senior Market Analyst Edward Moya clarified that gold prices will remain indifferent until the Federal Reserve’s February 2023 meeting. “It’s going to be hectic,” Moya said. “I’m neutral on gold until the Fed meeting Feb. 1. Major resistance is at $2,000. But I’d be surprised if we break above $1,950. We’ll likely consolidate here until the meeting. from the Fed,” added the market analyst. Market analysts and macro experts have no idea what the Fed will do at the FOMC meeting. Some believe an aggressive tightening program will continue, while others expect the Fed to relax and pivot with a “soft landing”.
The Biden administration and White House economist Heather Boushey told Reuters that current leaders do not expect a recession. “The steps have been taken and it looks like we are in a very good position to have that soft landing that everyone is talking about,” insisted Boushey. On Friday, Federal Reserve Governor Christopher Waller told reporters at a Council on Foreign Relations conference in New York that he favored a lower rate hike than the previous seven. So far, the Fed has implemented seven rate hikes in 2022, two of which were half-point hikes and five were three-quarter-point hikes. Waller may be looking at a quarter-point hike at the next FOMC meeting next month.
“I currently favor a 25 basis point hike at the next FOMC meeting at the end of this month,” Waller told reporters. “Beyond that, we still have a considerable way to go toward our 2% inflation target, and I expect support for continued monetary policy tightening,” the Fed Governor added.
It is very likely that the three main markets (precious metals, cryptocurrencies and stocks) will react in one way or another after the next decision of the Fed. Many believe that the decision of the next FOMC meeting will depend entirely on inflation indicators. US President Joe Biden tweeted about the US economy over the weekend as he believes the country is on the road to recovery. “Annual inflation has been down for six straight months and gasoline is down $1.70 from its peak,” Biden said. tweeted Saturday morning at 10:25 a.m. EST. “We are successfully transitioning from economic recovery to stable growth,” Biden added.
What do you think will be the outcome of the upcoming FOMC meeting and how do you think it will affect the current market trajectories of stocks, precious metals and cryptocurrencies? Let us know what you think about this topic in the comments section below.
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