Gold Spot Price Open: $1,065
Gold Spot Price Close: $1,063
Change in Gold Spot Price: -$2
Silver Spot Price Open: $13.88
Silver Spot Price Close: $14.24
Change in Silver Spot Price: +$0.36
Wednesday is being touted as one of the more important days across the global marketplace simply because the FOMC meeting finally yielded a tangible outcome rather than the typical Fed commentary we have become so accustomed to. When all was said and done, gold lost about two dollars while silver edged back up above $14/ounce after gaining more than thirty cents. Platinum and palladium also gained on the day, though platinum’s gains far outpaced those of palladium’s.
Fed Finally Raises Rates
Today is the day that some people have been waiting for for more than a year as the Federal Reserve of the United States has finally decided to raise interest rates for the first time in more than 7 years. The move came after many months of deliberation and close analysis of US and global economic data, and now the Fed feels as though the US economy is strong enough to venture forward with higher interest rates.
Officially, the Fed announced that they would be raising rates by .25%, which increases the cost of purchasing a car or a home. June 2006 is the last time interest rates were raised, and since 2008 the main interest rate in the US was kept between zero and .25%. While one quarter of a percent may not seem like the most substantial rate hike, many feel as though that this is the beginning of a series of hikes that may take place over the course of the next year or two. The Fed maintained that they will remain cautious when it comes to further hikes, because acting too fast is something that may undermine the overall strength of the US economic system and its growth potential.
The FOMC statement released following the meeting read, in part, “Economic conditions will evolve in a manner that will warrant only gradual increases in the federal funds rate.” Even though the vote to raise rates was a unanimous one, there are still questions as to the timing of today’s rate hike. Most confusing is the fact that today’s hike came during a period of time when inflation in the US is relatively under control. Typically, you see governments and central banks raise rates in order to stave off rising inflation, but that simply wasn’t the case this time around.
Today’s decision by the Federal Reserve has been a long time coming, but it is not without its critics. You see, with the US economy not putting forth impressive growth figures, and job creation at almost an even 200,000 per month, there exists a fair amount of people who think that higher rates will have a negative impact on the US economy. This is an especially big worry when you take into consideration the poor recent performances of so many other major global economic players. As we head into the final two days of the week, it will be interesting to see what kind of reactions stem from today’s move.
Wrap-Up
Naturally, the biggest concern for investors today was whether or not the Fed was going to act on raising rates. Now that this move has been set in stone, the rest of the week will see us pay close attention to the actions of investors not only in the US, but around the world as well. Though metals were able to put forth some gains on the day, the real test will be to see if these advances can be sustained through the end of the week and through the rest of the month.
