Hawkish Tone Unnerves Markets Around the World

Cassie Bastien

6/15/2017 1:26:08 PM

Daily Gold & Silver Market Report – 06/15/2017

After raising interest rates for the second time in 2017, the Federal Reserve left markets surprised. Jed Graham with Investors.com reports, “Most Fed policymakers still expect another rate hike in 2017 and three more next year. The central bank also said it will start to normalize its massive $4.5 trillion balance sheet by year-end, with the details suggesting a slightly faster run-off that some had expected.” After Fed Chair Janet Yellen's policy statement Wednesday, the Nasdaq fell 0.7 percent while the Dow Jones industrial average rose 0.2 percent. Graham mentioned expectations of a slower rate-hike trajectory, ahead of the Fed announcement, hit bank stocks, including JPMorgan Chase (JPM) and Bank of America (BAC). Both of those banks erased nearly all losses by close Wednesday, with several others even turning positive. While economists still expect inflation to firm in the months ahead, Fed policy expectations may continue to be volatile.

Gold Prices Hit Three-Week Low

Weighed down by a stronger U.S. dollar, Gold prices fell to a three-week low Thursday as investors evaluate the potential for another 2017 interest rate hike. However, Reuters Reporter Eric Onstad said with bullion underpinned by global uncertainties, these losses are limited. Natixis Metals Analyst Bernard Dahdah said, “Just like in previous rate hikes, the next day the market starts looking at the probability of the next hike because everything was factored in beforehand.” With the number of Americans filing for unemployment benefits falling more than expected last week, U.S. data bolstered the case for higher rates. “If you just look at economics, there's a chance of more downside. The Fed was talking about another potential rate hike later this year, which is negative for Gold. But there's still enough for people to worry about in geopolitics at different levels,” Dahdah said. Even so, Yuichi Ikemizu, Tokyo branch manager at ICBC Standard Bank, said that, “As long as uneasiness around the [President Donald] Trump government among speculators and investors exists, Gold will hold up pretty well.”

Low Silver Prices After U.S. Fed Meeting

For the second time in three months,the Fed increased interest rates by a quarter percentage point. As ETMarkets.com reported, the move was widely expected “and the U.S central bank cited continued economic growth and job market strength,” Precious Metals dropped, including a drop in Silver prices of nearly 0.9 percent. However, SMC Investments and Advisors in a research note said, “Bullion counter may trade on volatile path as U.S. Initial jobless claim data and movement of greenback to give further direction to the prices.”

At 2:25 p.m. (ET), the APMEX Precious Metals spot prices were:

• Gold, $1,257.00 Down $19.80
• Silver, $16.85 Down $0.40
• Platinum, $926.00 Down $28.90
• Palladium, $869.20 Up $5.40

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