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    JM Bullion Gold and Silver Market Update (12/14/16)

    Gold Spot Price Open: $1,160

    Gold Spot Price Close: $1,147

    Change in Gold Spot Price: -$13

    Silver Spot Price Open: $16.96

    Silver Spot Price Close: $16.80

    Change in Silver Spot Price: -$0.16

    Gold and silver initially did not move much in the lead-up and immediate wake of the FOMC’s statement, but shortly thereafter began falling quickly. When all was said and done, gold finished the day having dropped more than 10 dollars while silver ended up shedding more than 15 cents to solidify a spot well below $17/ounce. Platinum and palladium both ended the day down by roughly 10 dollars apiece.

    Fed Raises Rates As Investors Look Ahead to 2017

    Like we have been saying for the past two or more weeks, the investing world has been expecting that the Federal Reserve would raise interest rates as an outcome of this month’s policy meeting. There was such an air of confidence that even the most conservative polls were showing a 100% likelihood that the Fed would raise rates by the end of the day. That expectation was met today as it was officially announced, in the post-meeting statement, that rates would be raised 25 basis points. This moves the target Fed rates to a range of .50% and .75%. Because everyone was expecting a rate hike announcement to come today, there was no surprise on the part of investors. Despite the unsurprising nature of today’s announcement, precious metals still ended up feeling the heat by the time markets closed.

    Investors are now concerning themselves with what baseline interest rates will look like at this time next year. The FOMC indicated that there will be as many as 3 additional rate hikes next year, despite investors previously expecting a maximum of 2. So, going forward, the talk regarding US interest rates will be centered around exactly how many rate hikes are going to occur throughout the duration of 2017. With that being said, we will likely not be on the receiving end of more concrete interest rate information until 2017’s first installment of the FOMC policy meeting. By that point, Donald Trump will have likely taken office. Whether this means anything for the future of rate hikes or not, however, remains to be seen.

    Retail Sales Weaker Than Expected

    Even though all the focus of the day was directed towards the FOMC post-meeting statement, the US Commerce Department released November’s retail sales, which fell short of expectations for the first time in at least 2 months.

    According to the data, retail sales in November increased by .1% from the month before. Compared to October’s upwardly revised retail sales expansion of .6%, November’s data was disappointing. Expectations called for a monthly rise of .3%, Stocks were mixed on the day, but the fact of the matter is that a majority of the investing world was focused on the FOMC post-meeting statement.

    Perhaps tomorrow we will see a delayed reaction to the retail sales data, but even this is unlikely as the data is, quite simply, not that important to investors at the present moment. There will be more economic data released over the coming days and it will be interesting to see how the market reacts.

    Wrap-Up

    Apart from continued discussion regarding the FOMC’s rate hike announcement today, we will also have the weekly jobless claims report to contend with tomorrow. Like today’s retail sales report, however, this piece of data will not garner the same attention it has been in recent months as it is not seen as having any direct influence on future policy decisions—at least not at the present moment in time. We will be paying attention to the jobless claims report regardless, because we are closing in on 100 consecutive weeks where the seasonally-adjusted average number of claims has remained under the 300,000 threshold.

    Disclaimer: All Market Updates are provided as a third party analysis and do not necessarily reflect the explicit views of JM Bullion Inc. and should not be construed as financial advice.

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