Gold price drops in double digits as Yellen says failure to raise the debt ceiling will trigger the financial crisis and undermine the US dollar. During the day, it was seen that the price of gold fell from $ 1,753 to $ 1,729. US Treasury Secretary Janet Yellen told the US Senate on Tuesday that if the debt ceiling is not raised in time, the US will default, which will trigger a financial crisis and undermine the US dollar. Details Cryptocoin. com
Gold price and Fed policies
In her testimony before the US Senate, Yellen said, “If the debt ceiling is not raised, there will be a financial crisis, a disaster. This undermines the confidence in the dollar as a reserve currency… It would be a wound for the dollar if it was too large,” he said. A US default will also undermine trust in the US government, Yellen added, emphasizing how critical it is to act now. Yellen said:
It is imperative that Congress quickly address the debt limit. If he doesn’t, America will default for the first time in history. United States Series credit will suffer and our country will likely face a financial crisis and a recession.
In a separate letter to Congress on Tuesday morning, Yellen announced that the debt ceiling must be raised by October 18 to avoid a catastrophe. Yellen explains:
We currently anticipate that the Treasury will exhaust its extraordinary measures unless Congress takes action to raise or suspend the debt limit by October 18. At this point, we expect the Treasury to remain with very limited resources that will run out quickly. After this date, it is unclear whether we will continue to fulfill all the country’s commitments.
Yellen noted that raising the debt ceiling is about paying off current assets and that it is “necessary to prevent a catastrophic event for us.” The gold market struggled in light of Yellen’s comments as US Treasuries hit three-month highs and US stocks plummeted. December Comex gold futures saw double-digit losses and were most recently down 0.70% on the day at $1,739.80.
Powell also spoke with Yellan
Federal Reserve Chairman Jerome Powell also testified with Yellen, telling US Senators the potential effects could be “severe” if the debt ceiling is not raised. Powell also expressed his concerns about inflation, the Fed’s maximum employment targets and the recovery process. On inflation, Powell noted that price pressures are mounting and “probably will remain so in the coming months before they moderate.” At the heart of inflation are supply bottlenecks and high demand, he said. “These effects have been larger and longer-lasting than expected, but will decrease,” he said. Upon tapering, Powell noted that the test was nearly met. However, the maximum employment target is still far away. At its monetary policy meeting in September, Powell said the cut would likely begin in November and run until mid-next year. “The test of increasing rates is significantly higher than tapering,” Powell said. We want to see a very strong labor market. ” said.