Posted on March 15, 2017
Gold Spot Price Open: $1,205
Gold Spot Price Close: $1,221
Change in Gold Spot Price: +$16
Silver Spot Price Open: $16.98
Silver Spot Price Close: $17.29
Change in Silver Spot Price: +$0.31
Precious metals ended up posting decent gains in the wake of the all-important FOMC meeting today. When all was said and done, gold was up by more than 15 dollars while silver added more than 30 cents to move well above the $17/ounce threshold. Platinum and palladium were gaining right alongside gold and silver, but both metals ended the day right around even.
It is never any secret that the FOMC meeting and accompanying announcement take precedence over just about any other piece of data or geopolitical happening. This week did not see things stray from the norm as investors of all walks of life tuned into what the FOMC had to say at the conclusion of their 2-day meeting. Unless you have been willfully ignoring headlines lately, you know that the market has been expecting the Fed to raise interest rates for the first time this year.
Even though the expected rate hike had already been priced-in by investors, the official announcement did not come until today. The Fed moved to hike interest rates by 25 basis points, bringing the new funds rate range to .75%-1%. What’s more, the Fed made it clear that the investing public should still be expecting only 3 rate hikes this year. Thanks to the overly upbeat data we have received in recent weeks, there was a growing number of people who believed rates might be hiked as many as 4 or 5 times this year. Because of this unchanged outlook on the part of the Fed, gold and silver were able to regain some of the ground that was lost over the past 2 or 3 weeks. This is a classic instance of “sell the rumor, buy the fact” trading, where investors got rid of metals upon the rumor of rate hikes, but jumped back on the metals bandwagon once the rate hikes were officially announced. Now, the market waits to hear what Janet Yellen will say in her post-meeting statement, however most of the world will not get to log an official reaction to her words until tomorrow.
For metals investors, it will be intriguing to see if gold and silver can continue building upon today’s gains as we approach the end of the week, or if spot values will move back downward.
Though it might have felt that way, there was more than the FOMC meeting to talk about on Wednesday. A somewhat important piece of data, in the form of February’s retail sales figures, was dealt earlier on in the day. According to the US Commerce Department, retail sales through the month of February improved by .1% from the first month of the year. This may not be the largest jump forward, but was about in line with expectations.
Despite this reading, the Dollar began falling in the wake of the FOMC meeting and really did not look back from there. Despite a few consecutive weeks of gains, the Dollar’s upward trajectory was effectively halted on Wednesday. As is the case with precious metals, it will be interesting to see if the greenback can bounce back from today’s losses, or if the next two days will see things get worse for the USD.
Though the FOMC meeting has come and passed, and the expected announcement was made, that does not mean investors will stop talking about interest rates altogether. You can expect that tomorrow will open up with more interest rate talk as well as a few key pieces of economic data. The weekly jobless claims is just one of a few reports expected to strike a chord with investors.