Fed keeping close eye over gold prices: Fed official
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This comes as the price of gold recently increased by 0.42%, reaching a historic high of over $2,153 per troy ounce, as per recent trading data.
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The Treasury Building is viewed in Washington, May 4, 2021 (AP)
On Friday, Federal Reserve Board of Governors member Michelle Bowman stated that while the US Federal Reserve is keeping an eye on the price of gold, it is not prioritizing it over other indicators.
This comes as the price of gold recently increased by 0.42%, reaching a historic high of over $2,153 per troy ounce, as reported by trading data earlier this month.
"Yes, we were thinking about it. I don't know that we're thinking about it more strongly than any other indicator at this point," Bowman said during a discussion hosted by the Manhattan Institute.
The historic increase in the price of gold holds significance due to its nature as a dollar-denominated asset. When the value of gold rises, it often indicates a decrease in the value of the dollar.
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An increase in the price of gold can reflect various factors, including a loss of confidence in the dollar. When investors perceive higher risks or uncertainties associated with the dollar, they may seek refuge in gold as a safe-haven asset, thus driving its price up.
As the West contemplates the unlocking of Russian assets, many are questioning the future of the dollar's dominance in international trade.
The US has voiced uncertainties but has not displayed any signs of serious concern.
At a recent press conference in Brazil, US Treasury Secretary Janet Yellen acknowledged that the West's unfreezing of Russian assets is likely to pose a threat to global financial stability, but downplayed the significance of the matter.
She further noted that the global economy lacks viable alternatives to the financial architecture centered around the dollar, euro, and yen, and underscored the necessity for collaborative efforts within the G7 to examine different approaches with regard to the use of Russian assets.
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Deputy Treasury Secretary Wally Adeyemo likewise rebuked such risks, stating that the strength of the US economy prevents it from being undermined by the implementation of sanctions.
In February, Treasury Undersecretary for Terrorism and Financial Intelligence Brian Nelson said that the US does not see major developments toward de-dollarization of the global economy.
He added that the US dollar's position remains very strong and that the US economy and its financial system remain in good standing.
