Federal Reserve meeting sparks earlier Tapering? - Gold News Series #4

Introduction

Welcome back to our Gold News series, where we bring you short and sweet updates on the global economy. Today’s news discusses the recent Federal Reserve meeting on tapering and the US economic growth outlook.

Federal Reserve Tapering

The outcome of the FED reserve meeting yesterday (18th August 2021) saw the potential to ease bond-buying early next year should the economy persist on its road to recovery.
The gold price has lost its momentum ($1,780/Ounce) due to market expectations that the tapering announcement could take place at the next FED meeting in September. US dollar had also strengthened Thursday as a result of the meeting.

Economic Outlook

The recent economic data published concerning inflation, unemployment, and consumer sentiment has undoubtedly shifted the market’s view on the tapering date, albeit the outcome of the FED meeting. The market expects that the tapering announcement will take place in November instead. The reasoning stems from inflation readings combined with the Delta variant that has sparked concerns of economic lockdown.
One of the main concerns of FED chairman Jerome Powell is to monitor the inflation risk to prevent a repeat of the 2013 bond market sell-off.
On the other hand, the impact of the Delta variant is said by St Louis Fed President not to pose a threat towards businesses and households. He believes that many companies have found ways to produce products and services during the pandemic. Consumers have also found ways to continue consumption during the lockdown.
The recently published retail performance data indicated the rise in demand for e-commerce platforms among businesses. Demand for said platforms is a result of the continued consumption of products and services by consumers.