Gold Prices Drop for Third Straight Session

Cassie Bastien

3/2/2017 9:39:57 AM

Daily Gold & Silver Market Report – 03/02/2017

Gold futures were set to drop Thursday “for a third straight session as increasing expectations for a rate increase, as early as mid-March, and continued optimism about global economic growth dulled the appeal of Precious Metals,” MarketWatch News Editor Rachel Koning Beals reported. Remarks by Federal Reserve Governor Lael Brainard late Wednesday seemed to support investor belief that the Fed may raise interest rates at the Federal Open Market Committee set for March 14-15. Higher rates can weaken demand for safe-haven assets like Gold, but can also “deliver a fillip to the U.S. dollar, making commodities priced in the currency less appealing to buyers using other monetary units,” said Koning Beals. Investors remain skeptical following comments by President Donald Trump and various Fed members, but the real determining factor will come Friday when Fed Chair Janet Yellen delivers her speech.

Precious Metals Drop as U.S. Interest Rate Hike Bets Grow

Silver and other Precious Metals declined early Thursday after a line of Federal Reserve speakers strongly hinted a U.S. interest rate hike would happen within the month. Furthermore, bank stocks gained ground late Wednesday after bets of a rate hike. Sam Bourgi with EconomicCalendar.com said, “Regional Fed governors William Dudley (New York), John Williams (San Francisco) and Patrick Harker (Philadelphia) have all indicated that the case for tightening monetary policy has strengthened in recent months.”

• Gold futures declined for a second consecutive session to trade at more than one-week lows on the Comex division of the New York Mercantile Exchange.
• Silver is on track for a narrow decline for the week.
• Thirty-day Fed Fund futures prices imply a 66.4 percent chance of a rate hike at the March 14-15 Federal Open Market Committee meeting.

Investors Encouraged by President Trump

The Dow Jones industrial average leaped past 21,000 Wednesday, making new records after recently hitting 20,000 for the first time. In addition, the S&P 500 and the Nasdaq both increased about 1.3 percent. Forbes Reporter Lauren Gensler said, “Stocks were climbing after President Donald Trump addressed a joint session of Congress on Tuesday night, striking a conciliatory tone and reiterating a commitment to various pro-growth items he intends to pursue.” Although investors had looked forward to President Trump’s promise of higher fiscal spending and deregulation, they are still anxiously awaiting an action plan. Luke Bartholomew, an investment manager at Aberdeen Asset Management, said, “The market has flipped from being skeptical that a move in March was likely, to now thinking it is more likely than not.” After the dollar rose in response to the Fed’s remarks, Gensler said, “Investors sold off so-called safe haven assets, including Gold and government bonds.”

At 10:39 a.m. (ET), the APMEX Precious Metals spot prices were:

• Gold, $1,244.50 Down $7.40
• Silver, $18.45 Down $0.09
• Platinum, $1,002.40 Down $16.50
• Palladium, $777.50 Down $3.00

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