Daily Gold & Silver Market Report – 6/16/2016

Marcey Hollon

6/16/2016 2:56:00 PM

GOLD HITS TWO-YEAR HIGH FOLLOWING FED ANNOUNCEMENT; BREXIT COULD HURT U.S. BANK EARNINGS

The Federal Reserve remained cautious on the economy at their latest policy meeting, giving a less dovish tone. The possibility of Great Britain leaving the European Union has investors turning toward Gold as a safe haven. "We sold off in the first place because of the rocketing dollar, impending rate hikes and people flooding into equities as they took a risk-on approach. But that's not the world of June 2016," ING analyst Hamza Khan said. "We have equities selling off, oil selling off, the fear that Brexit will hit the markets. When you're in this risk-off environment, where do you go? Gold is a pretty good solution."  While the Fed maintains there will be two more rate hikes through 2016, sluggish economic growth may dampen future increases.

Large U.S. banks are keeping watch to see if Britain decides to leave the European Union, which could drive up costs and weaken capital market activity.  Large banks such as Bank of America and JPMorgan Chase could be affected, while Morgan Stanley and Goldman Sachs are expected to be hit the hardest due to their larger exposure to the capital markets. "Banks may have a two-year transition period and they could experience both revenue and expense headwinds during the transition," KBW analyst Brian Kleinhanzl wrote in a note Thursday. The Federal Reserve has kept an eye on the British vote to leave the EU, referred to as Brexit, as it could impact the U.S. economy and further delay interest rate increases.

 

At 3:55 P.M. (ET), the APMEX Precious Metals spot prices were:

• Gold, $1,283.50 Down $4.50
• Silver, $17.27 Down $0.29
• Platinum, $970.70 Down $4.10
• Palladium, $532.60 Down $1.00

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