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Gold Prices Cut with Hedge Funds Surprised

Daily Gold & Silver Market Report – 03/20/2017

Federal Reserve Chair Janet Yellen's comments last Wednesday regarding future 2017 interest rate hikes “sparked the biggest Gold rally since November,” Bloomberg reporter Luzi-Ann Javier said. “Negative yields give an advantage to [Precious Metals], which some investors consider a store of value and a hedge against inflation.” Morgan Stanley analysts wrote in a note early last week that Gold’s rebound has been partly driven by risks to global growth, the lack of clarity on U.S. tax reform and “persistent doubts” about the U.S. infrastructure plan by President Donald Trump. “The broader trend is still negative” for Gold, U.S. Bank Wealth Management Senior Investment Strategist Rob Haworth said. “It’s going to be hard to sustain the gains with economic growth still pretty solid, the Fed looking to raise rates and some prospect for fiscal policy support before year end.”

  • While the Fed funds rate rose by a quarter point to 0.75 percent to 1 percent last week, that upper-band of the range is still well below the average of 5.18 percent over the past four decades. 
  • Fed policy makers have penciled in two more quarter-point rate increases this year and three in 2018 (BloombergMarkets.com).

Silver Prices Open Flat Following FOMC

Spot Silver prices hovered within a thin range ahead of what is expected to be an active week within the marketplace. The gray metal is on its third day of positive prices following the Federal Reserve’s decision to raise interest rates. Economic Calendar financial market analyst Sam Bourgi said, “The ‘buy the rumor, sell the fact’ event sent Precious Metals soaring as the U.S. dollar fell.” Although no major economic events are planned to start the week, Federal Reserve Chair Janet Yellen is scheduled to speak Thursday. We are not set to see another rate hike for a while, but any hints Yellen provides to investors could change the Precious Metals market from bullish to bearish.

  • May Silver futures were trading at $17.42 per ounce at 7:43 a.m. (ET), little changed from their previous close.

What Will Keep the Bull Market Going?

Many analysts are saying that since Election Day, investors have dubbed this “Trump rally” as a bigger impact on commodities rather than the Fed's interest rate hikes. “There have been pessimists and bears and skeptics and naysayers throughout this bull market, which has lasted eight years, so it is an aging bull market but it seems to still have a lot of strength,” Yardeni Research President Ed Yardeni said in a recent interview with CNBC. Investors and economists are fairly constructive on growth prospects. Capital Economics said in a research note last week it is forecasting the economy will grow by 2.3 percent this year, despite "a subdued start" to 2017. Yardeni said, “It's hard to see what is suddenly going to create a recession. ... It looks like the economy is going to still deliver earnings which will keep the bull market going.” Yardeni believes a delay in President Trump’s policy agenda may actually not matter too much for stocks. He said it doesn’t matter when we get that information, but “as long as we get the tax reform” and tax cuts, “then this move is justified.”

At 10:28 a.m. (ET), the APMEX Precious Metals spot prices were:

  • Gold, $1,235.30 Up $2.40
  • Silver, $17.50 Up $0.01
  • Platinum, $970.80 Up $5.80
  • Palladium, $778.60 Up $1.30

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Disclaimer:
APMEX Market Reports provide our readers with a review of spot price activity and some of the factors that may be affecting the market for Precious Metals. While the information is obtained from sources we believe to be reliable, we do not guarantee its accuracy or its completeness and we encourage you to conduct your own investigation prior to making any decision based on the information. The Market Reports are not intended as a comprehensive discussion and there may be other factors affecting the financial marketplace. These Market Reports are provided for informational purposes only and do not constitute a recommendation by APMEX to hold, purchase or sell any Precious Metal product. All orders, purchases and sales, if any, are subject to the terms of the User Agreement and other applicable policies.

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