Top Stories This Week: Gold Price Breaks US$1,800, Market Eyes Fed's Next Move
US Federal Reserve Chair Jerome Powell said this week that smaller rate hikes are coming, and could start as early as the central bank's mid-December meeting.
This week started off slow for gold, but the yellow metal picked up pace mid-week, rising to just above US$1,800 per ounce by Thursday (December 1). It closed out the five day period around that level.
Diverse factors continue to impact the gold price, but chief among them right now are recent comments from US Federal Reserve Chair Jerome Powell. During a closely watched Brookings Institution speech on Wednesday (November 30), he said that smaller interest rate hikes are coming and could start as early as this month.
"(I)t makes sense to moderate the pace of our rate increases as we approach the level of restraint that will be sufficient to bring inflation down. The time for moderating the pace of rate increases may come as soon as the December meeting" — Jerome Powell, US Federal Reserve
According to Powell, the Fed recognizes that its actions take time to be reflected in the market, and raising rates at a slower pace will allow it to take stock of its progress in taming high prices. Experts often use the consumer price index to judge inflation, but details for November won't be released until mid-December.
For now, market watchers are eyeing this week's personal consumption expenditures (PCE) price index data — when food and energy are excluded, it shows a lower-than-anticipated 0.2 percent month-on-month increase in October.
The PCE price index measures what people living in the US pay for a broad range of goods and services, and Powell has emphasized its accuracy as a gauge of where inflation is headed.
The Fed has hiked rates six times so far this year, with the last four boosts being 75 basis points each. The central bank's next meeting runs from December 13 to 14.
Lithium-ion batteries to drive "huge" raw materials demand
Moving over to the battery metals space, INN's Priscila Barrera recently returned from this year's Benchmark Week in LA. Hosted by Benchmark Mineral Intelligence, the event featured commentary on lithium, cobalt, graphite and more.
One key theme was the important role that mining will play in helping global governments reach net-zero emissions goals by 2050.
Outlining looming demand, Simon Moores of Benchmark Mineral Intelligence said installed lithium-ion battery capacity needs to reach 300 terawatt hours in the next 30 years. That means worldwide lithium-ion battery output will have to rise by four times the pace seen today, going up at an annual rate of 20 terawatt hours.
What will the implications be for raw materials? According to Moores, the impact will be "huge."
"Critical minerals mining and refining needs to shift (from) today’s thinking (of) 50,000 tonne (units) to 500,000 tonne units" — Simon Moores, Benchmark Mineral Intelligence
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Securities Disclosure: I, Charlotte McLeod, hold no direct investment interest in any company mentioned in this article.
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