Gold Spot Price Open: $1,168
Gold Spot Price Close: $1,158
Change in Gold Spot Price: -$10
Silver Spot Price Open: $15.96
Silver Spot Price Close: $16.01
Change in Silver Spot Price: +$0.05
Precious metals finished mixed but were undeniably in the face of some pressure on Wednesday thanks to some comments from the US Federal Reserve. When all was said and done, gold lost about ten dollars while silver actually gained about 5 cents. Platinum gained more than ten dollars on the day while palladium’s gains were kept below 10 dollars.
December Rate Hike Still on the Table
The Central Bank of the United States announced today that investors should definitely not count out the possibility of a December interest rate hike. In fact, the Fed made it seem as though an interest rate hike in December is to be expected. According to the Fed’s statement, “In determining whether it will be appropriate to raise the target range at its next meeting, the committee will assess progress – both realized and expected – towards its objectives of maximum employment and 2 percent inflation.”
Market experts have now upped the chance of a rate hike to nearly 50%, despite the same expectation being in the 30% range somewhere over a week ago. As for gold and silver, this was not such good news as the US Dollar regained a lot of its strength in the wake of the meeting. Even though some are expecting rates to be hiked next month, there are plenty of others who still feel as though the recent decisions by other global central banks as well as the slow pace of growth of the US economy will eventually force the Fed’s hand; forcing them to retain current interest rate levels.
Moderate Rate of US Economic Growth Not Worrying Fed
A major theme of the Federal Reserve’s post-meeting statement was of their confidence and contentedness with the current rate of US economic growth. Despite the overall GDP upticking only slightly, the overall employment scene has improved and so too has the level of disposable income in the pockets of average Americans.
The 2% inflation target set forth by the Fed is yet another eyebrow-raiser for most investors, as it is widely believed we will not reach that goal before the end of the year. Still, the Fed’s statement holds that the United States’ central bank is “reasonably confident” that the 2% target inflation rate will be achieved. Between now and next month’s meeting, the Federal Reserve has quite a bit of information to review, including all employment reports as well as GDP data. Their analysis of these figures will help voting members of the FOMC decide whether the first rate hike in more than 7 years is the right move to make before the end of the year.
All in all, investors are content with the Fed being a bit more transparent at this meeting than they have been in meeting’s past. If US economic data turns around and begins coming back consistently positively, we may still see a hiking of interest rates this year after all. I, however, am a bit skeptical of this.
Wrap-Up
When it comes down to it, the main focus across the global marketplace today was that of interest rates in the United States and what the Fed would have to say about the possibility of hiking them. By the time markets reopen on Thursday, I anticipate that investors will continue to pick apart the words of the Federal Reserve and their post-meeting statement.
