Stocks, precious metals and cryptocurrencies have tumbled in the last three weeks of 2023 and attention is now focused on the next Federal Open Market Committee (FOMC) meeting in 11 days. On Friday, Federal Reserve President Christopher Waller said that the next FOMC meeting should raise the benchmark interest rate by a quarter percentage point. Analysts believe the current market trajectory will depend on the outcome of the next Fed meeting.
Despite the rally in stocks, cryptocurrencies, and precious metals in 2023, markets are still nervous ahead of the Fed meeting
At 2:45 p.m. Eastern time on Saturday, January 21, 2023, the global cryptocurrency market capitalization was up 5.87% from the previous day, hovering around $1.06 trillion. The leading crypto asset,Bitcoin (BTC)had appreciated 11.63% against the U.S. dollar over the past seven days. The second largest digital currency by market valuation,Ethereum (ETH), rose 8.33% over the past seven days. had risen 8.33% during the week against the greenback. The increase in value of these two crypto assets has also increased the USD value of the following thousands of digital currencies:BTCand; ETH
The day before, on Friday, January 20, the stock market ended the day in the green. The top four benchmark stocks (S&P 500, Dow Jones, Nasdaq, and Russell 2000) ended the day up 1% to 2.66% against the US dollar. The Nasdaq Composite Index rose 2.66% to its high, the S&P 500 rose 1.89%, the P 500 gained 1.89%, the Russell 2000 Index (RUT) rose 1.69%, and the Dow rose 1%. U.S. stocks rose for the second week in a row this year. The small-cap market index RUT is up 7.1% this year, with small-cap stocks leading the 2023 equity race.
Precious metals are also doing well, with a troy ounce of gold trading at$1,927.30 per unit and silver at$1,927.30 per unitand silver at $24.01 per ounce. Like cryptocurrencies and stocks, precious metals rose in 2023, erasing the losses that occurred in December 2022. Gold enthusiast Peter Schiff believes the price of the precious yellow metal will grow higher this year.” Gold is currently trading above $1934, its highest price since April 2022,” Schifftweetedon January 19.” However, gold stocks have yet to take even last week’s high. In fact, gold stocks need to rise 30% from here just to get back to where they were trading in April 2022. This sell-off may not last long,” he added.
OANDA Senior Market Analyst Edward Moya, speakingwith Kitco News, detailed that gold prices will remain indifferent until the Federal Reserve’s February 2023 meeting.” It’s going to be choppy,” Moya said.” I am neutral on gold until the Feb. 1 Fed meeting. The main resistance is at $2,000. But I would be surprised if it moves above $1,950, which is where it will consolidate until the Fed meeting,” the market analyst added. Market analysts and macroeconomic experts have no idea what the Fed will do at the FOMC meeting. Some think the aggressive tightening schedule will continue, while others expect the Fed to ease up and pivot with a “soft landing.”
Biden administration and White House economist Heather Busheytold Reutersthat current leaders are not expecting a recession. Bushey asserted, “They are taking steps and seem to be in a very good position to do the soft landing that everyone is talking about.” On Friday, Federal Reserve Governor Christopher Waller told reporters at a Council on Foreign Relations meeting in New York that he prefers to raise interest rates on a smaller scale than the previous seven, 62}. So far, the Fed has raised rates seven times in 2022, including two half-point hikes and five three-quarter-point hikes. Waller can envision a quarter-point hike at the next FOMC meeting next month.
“I currently support a 25 basis point hike at the next FOMC meeting at the end of this month,” Waller told the press. He added, “After that, we still have quite a ways to go toward our 2% inflation target, and I expect to support continued monetary tightening.”
After the Fed’s next decision, it is quite likely that the three major markets (precious metals, cryptocurrencies, and equities) will react in some way. Many believe that the next FOMC decision will depend entirely on inflation indicators. U.S. President Joe Biden tweeted over the weekend that he believes the U.S. economy is on the road to recovery.” Annual inflation has fallen for six straight months and gasoline is down $1.70 from its peak,” Bidentweeted at 10:25 a.m. Eastern Time Saturday.” We are successfully transitioning from economic recovery to stable growth,” Biden added.
What do you think will be the outcome of the next FOMC meeting and how do you think it will affect the current market trajectory for stocks, precious metals and cryptocurrencies? Let us know what you think on this subject in the comments section below.
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