Once Larry Williams said that technical analysts are like passengers on a ship standing behind the boat and watching the waves created by the ship's propeller, trying to determine the direction of the ship by observing the propellers. The drawback of this type of observation for predicting the future direction of the ship is that it is not always reliable. Only the captain knows when and where he will turn the wheel.
On Friday, Fed Chair Jerome Powell hinted at a pause in monetary policy tightening that began in March 2022. At a conference in Washington, D.C., Jerome Powell voiced that the key interest rate is elevated to such an extent that its impact on consumers and business loans is significant enough to curb economic growth, and restrict borrowing and spending. With the 8% inflation and almost zero interest rates in March of last year, the Fed initiated its first interest rate hike. It marked the beginning of 10 consecutive rate hikes at each FOMC meeting, resulting in the Fed's benchmark rate rising to 5% by the May FOMC meeting. According to the CME FedWatch tool, prior to Powell's speech, there was a 64.4% probability that the Federal Reserve would pause rate hikes in June. After the speech, the likelihood that the Federal Reserve will start pausing rate hikes next month rose to 81.4%. Powell's speech on Friday clarified the future intentions of the monetary policy of the Federal Reserve, thereby creating a bullish tone for the precious metal prices.