Precious metals such as gold and silver have outperformed all asset classes following the March FOMC policy meeting, as investor uncertainties about future economic prospects grow.
The iShares Silver Trust ETF SLV and the iShares Gold Trust ETF GLD, two exchange traded funds that invest in physical silver and gold bars, have been popular safe havens since the collapse of U.S. banks and are now continuing to extend their gains.
Precious metals outperformed both Treasury bonds and major market indices after the Fed's policy statement and Fed Chair Jerome Powell's press conference Wednesday, while Bitcoin BTC/USD and stocks sank as risk sentiment deteriorated.
Read also: Is Silver the Next Gamestop? How Retail Investors Challenged Wall Street Giants Again
The ProShares Bitcoin Strategy ETF BITO, which tracks the performance of the major cryptocurrency, plummeted about 5% throughout the day, extending losses after the Fed's decision.
Both the SPDR S&P 500 ETF Trust SPY, which tracks the S&P 500 index, and the Invesco QQQ Trust Series QQQ, which tracks the Nasdaq 100 index, also reacted badly after the Fed meeting on Wednesday.
The U.S. dollar fell further against most major currencies, with the ICE U.S. Dollar index down 0.6%. The 10-year Treasury yield declined from 3.6% to 3.44%.
Adrian Day, chairman and CEO of Adrian Day Asset Management, recently said: “it is clear that the economy is heading into a recession. Add instability in the financial system and new quantitative easing from central banks, and we have the perfect recipe for higher gold prices.”
Check out this: Benzinga’s Precious Metal Hub
Key Takeaways From The March FOMC Meeting
The Federal Reserve increased interest rates by a quarter of a percentage point to 4.75%-5% at its March meeting, citing that some further increases may be appropriate. During the press conference, Fed Chair Jerome Powell dismissed prospects for Fed rate cuts, but also emphasized the need to assess incoming data with regards to future policy decisions in light of the ongoing stress in the banking system.
The Fed believes that some tightening in lending conditions will happen, likely weighing on growth, job market and inflation, and this may mean monetary tightening has less work to do.
In the updated Fed economic projections, GDP growth has been revised lower in 2023 (0.4% vs 0.5% in December) and 2024 (1.2% vs 1.6%).
Read also: Inflation Expert Says Markets Are In 'Sweet Spot' As End Of Fed Rate Hike Cycle Nears
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