How a Likelier Rate Hike Could Affect Gold
Possibility of an interest rate hike
Gold prices initially edged lower for the day on Thursday, November 16. However, they later turned marginally higher, closing at $1,278.2 per ounce. The economic numbers from the United States bolstered the possibility of the Federal Reserve raising interest rates next month and in 2018.
The retails sales data, which measures the change in the total value of sales at the retail level, was at 0.2%—higher than the analyst expectation of 0%. However, the unemployment numbers on Thursday were at 249,000—higher than the forecast of 235,000. Higher unemployment is negative for the country’s economy in general while higher retail sales are good for the economy. The underlying US consumer prices rose in October, strengthening the view that recent disinflationary trends worrying the Fed have likely ended.
Interested in AUQ? Don't miss the next report.
Receive e-mail alerts for new research on AUQ
Other metals and miners
If US Treasury rates rise, all the four precious metals could be negatively affected, as they’re non-yielding-paying assets.
The rise in the equities markets, in general, could also hurt precious metals and their mining stocks. The US dollar also edged up as investors priced in more upcoming US rate hikes.
Among the other precious metals, silver and platinum rose 0.59% and 0.33%, respectively, while palladium was marginally low at 0.03%. The iShares Gold Trust (IAU) and iShares Silver Trust (SLV) have seen year-to-date gains of 10.9% and 6.7%, respectively.