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 United States Tapering.

Tapering Discussion

• The recent taper discussion at the Jackson Hole symposium has seen many members of the Federal Reserve pushing towards a September Taper announcement. A September Taper would mean that its execution will occur in October and conclude towards quarter 1 or 2 of 2022. 
• Federal Reserve chairman Jerome Powell believes that Tapering "could" take place this year. However, Powell struggles in striking a balance between US economic data and the spread of the Delta variant.
• He acknowledges that economic recovery has surpassed expectations and that inflation has risen sharply. Policymakers have realised that rapid inflation resulting from transitory factors is not something to be taken likely during this period. Powell believes that ill-timed tapering without considering all the elements may result in slowing the job market and other economic activity. 
• Former Reserve Bank of India, Raghuram Rajan worries that the Federal Reserve will fall behind as it gradually removes the Covid era stimulus. The Fed believes that it is time to slow the tightening process due to the long-term disinflationary forces like ageing, automation, and globalisation. Like many industry leaders, Mr Rajan is concerned that the US Fed does not account for the new forces associated with the post-pandemic, similar to the post-Global Financial Crisis. 

Gold

• Gold remains high at $1,815/ounce earlier on Tuesday. The market is looking towards US data to determine the timing of the taper.  
• The decision on tapering has affected the US dollar and will subsequently affect the price of gold. Gold's recent price gains are due to the stability of the US economy. 

Sources

Live Mint

FX Street

Borneo Report

Weekly Gold Investment Series Guide

Checkout our blog weekly or subscribe to our newsletter for the latest Gold Investment Guides

Click here to visit our Blog

Click here to Subscribe to our Newsletter