Gold drifts higher as the dust settles from Fed Day
UK investment firm Schroders bullish on commodities based on an unusual rationale
USAGOLD – 9/22/2022) – Gold declined before the Fed rate announcement, zoomed higher after, then settled back in the same range it was trading before the day began – in short, a sound and fury signifying nothing. As the dust settles this morning, it is up $2 at $1678. Silver is up 9¢ at $19.74. With Fed Day out of the way, the emphasis is likely to shift to Russia’s mobilization and what various countries are likely to do about the overly strong dollar. Overnight, the Bank of Japan intervened to support the yen in currency markets for the first time since 1998.
Schroders, the British investment firm, is out with a report overnight on why it remains bullish on commodities, and the primary rationale for its optimism might surprise you. “Perhaps what gives us the highest conviction on commodities as an asset class,” it reveals, “is not the similarities to historical bull markets but the differences. In particular we continue to believe that the global focus on climate mitigation strategies and decarbonisation is limiting the supply response to higher prices to an extent that is unprecedented. That breakage of the link between higher prices and a supply response is likely to significantly extend the commodities bull market. When we combine these factors to our belief that we are entering a fundamentally more inflationary age, the case for an enlarged commodities allocation remains compelling.”