What Will Happen To Gold Under The Fed's New Monetary Framework?

Gold last traded at $1,905 an ounce. Silver at $23.90 an ounce

NEWS SUMMARY: Gold held its ground Tuesday after Powell's speech reaffirms uncertainty. Stocks were mixed on continued stimulus negotiations.

 OilPrice.org---"In August 2020, Federal Reserve Chair Jerome Powell delivered his Jackson Hole speech, unveiling a new monetary framework in the process. He announced a flexible average inflation targeting strategy (FAIT). The new regime implies that when the inflation undershoots its target in one period, the US central bank will try to push inflation above the target in the next period to compensate for the previous shortfalls....But shouldn't the central bank rather try to achieve the price stability and protect the society against high inflation? Of course, it should. However, the recent years of low inflation persistently below the Fed's target of 2 percent (...asset price inflation is significantly higher). The shift to the FAIT is a big move that should be positive in the long run for gold, which is considered an inflation hedge. But, perhaps even more important is the change within the employment side of the Fed's mandate...Under the new regime, the Fed will not hike interest rates preemptively and unless there are visible signs of accelerating inflation. It means that the FOMC will prioritize employment and economic growth over inflation. Hence, both major revisions - in the inflation and employment objectives - are fundamentally positive for the gold prices....The Fed's new framework implies lower real interest rates - is good news for the precious metals investors. And the risk of inflation getting out of control should also support the gold prices."