Gold Spot Prices Rise to the Occasion

Cassie Bastien

3/17/2017 9:42:47 AM

Daily Gold & Silver Market Report – 03/17/2017

Gold sees gains as investors seek to hedge against U.S. dollar weakness following Wednesday’s interest rate hike. Rosland Capital Senior Economic Adviser Jeffrey Nichols explains there is a rush to Gold over equities as “a competition between the two markets in the short term looks like Gold will win.” Many investors anticipate further inflation worldwide as not only the Federal Reserve but also other central banks “begin to pull back the pace of implementing quantitative-easing measures,” says MarketWatch Editor Mark DeCambre. As the Fed forecasts additional rate increases in the future, along with President Donald Trump’s plans for economic growth, investors are keeping a heavy eye on Precious Metal spot prices. FXTM analyst Lukman Otunuga noted, “Although bulls have exploited dollar’s weakness to elevate Gold, gains could be limited in the longer term if the Fed readopts an aggressive stance.”

How the Fed Rate Hike Helped Silver Prices

Although the interest rate hike was very much expected, the reaction of the marketplace was not. In fact, Darren Capriotti with Gold Eagle News said “the markets reacted as if there had been an interest rate decrease, which in turn seemed to help both the price of Gold and the price of Silver.” The U.S. dollar generally increases in value with a stricter monetary policy, which in turn allows you to buy more Silver and Gold with the dollars you have, which drives the price of metals lower. However, the Precious Metals market acted the exact opposite Thursday, almost as if interest rates had decreased. So the question is what fueled the price of Precious Metals? Capriotti says, “the truth is that the environment seems to have changed.” What remains unknown is how the market will react to any future rate hikes this year. Capriotti said, “At some point, large asset prices will have to be addressed — either through a correction or through policy. And that means Silver continues to be a safe haven for those who don’t trust the current market conditions.”

Platinum and Palladium Prices Jump Following Rate Increase

Precious Metals continued their rally Friday as the U.S. dollar started to retreat in the aftermath of Wednesday's Fed meeting. Instead of the dollar increasing, reporter Leia Toovey with Economic Calendar said investors “shrugged off the expected rate hike and instead focused on the Fed’s commentary when it comes to the pace of future rate hikes,” causing a drive in demand for Precious Metals including Platinum and Palladium. According to Norilsk Nickel CEO and co-owner Vladimir Potanin, Palladium demand from customers is exceeding production. Toovey said, “Given the recent acceleration in the U.S. economy, there was the sentiment that the Fed might increase its rate hike targets,” and many investors remain curious as to where the Precious Metals market will head next.

At 10:42 a.m. (ET), the APMEX Precious Metals spot prices were:

• Gold, $1,232.80 Up $2.90
• Silver, $17.45 Up $0.05
• Platinum, $963.10 Up $2.70
• Palladium, $778.40 Up $10.30

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