Daily Gold Market Report

Economic Confidence or Over-Optimism?
A Closer Look at Yellen’s Interpretation of Rising Long-term Bond Yields

(USAGOLD – 10/27/2023) The gold price continues to remain around the $1980 level and has all week. Gold is trading at $1982.89 this morning, down $1.82. Silver is trading at $22.78, down 1 cent. Treasury Secretary Janet Yellen spoke yesterday in a Bloomberg interview hours after data showed the US economy grew at an annualized rate of 4.9% in the third quarter, the fastest pace in nearly two years. In the interview she mentioned, “The surge in longer-term bond yields in recent months is a reflection of a strong US economy, not the jump in government borrowing driven by a widening fiscal deficit.”

Analyzing Yellen’s stance, it might be argued that her opinion regarding the robustness of the U.S. economy and the projection of sustained higher interest rates could be overly optimistic and does not capture the full picture. Last week, Federal Reserve Chair Jerome Powell enumerated several factors contributing to the rise in yields, echoing the economic resilience point made by Yellen. Contradictory to Yellen though, he also highlighted an increased attention to deficits as another potential “candidate” influencing these movements, along with other elements such as the Fed’s diminishing bond portfolio.

Simply summarized best by Sven Henrich:

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