Volatility or market risk and gold walk hand-in-hand, especially when there is increased unrest in the market.
Janet Yellen’s comments to the British Academy in London on June 27, 2017, that there is more to come with regard to interest rates could move precious metals.
Gold, silver, and platinum rose on Tuesday, June 27, 2017, but palladium continued to diverge from its fellow precious metals, falling 0.50% for the day.
Despite the Fed’s hawkishness, traders are pricing in less than a 15% chance of a rate hike at the Federal Open Market Committee’s September 2017 meeting.
Precious metals saw a down day on June 26, 2017. Gold futures for July expiration fell 0.79% to $1,244.9 per ounce. Silver futures also tumbled 0.5% and ended up at $16.6 per ounce.
Gold is one of the major contributors to India’s import costs, and India ranks among the top consumers of gold after China.
Silver has seen a five-day trailing loss of 2.6%, while gold and platinum fell 1.7% and 1.9%, respectively.
Despite the hawkishness of the Federal Reserve, futures traders are pricing in less than a 15% chance of a hike at the Fed’s September meeting.
Key factors that could affect gold include unrest in the Middle East, the next stage of Brexit, and President Trump’s ability to bring about financial reforms.
On Thursday, June 15, gold fell ~1.7% and touched a low of $1,251.7 per ounce before settling at $1,253.0.
Gold prices rebounded on Friday, June 16, 2017, after the Thursday slump. Gold futures for July expiration rose 0.17% and gave a close at $1,255.1 per ounce.
Besides the Fed rate hike phenomenon, the US dollar has also been affecting the dollar-denominated precious metals.
As investors expected, the FOMC (Federal Reserve Open Market Committee) increased interest rates on Wednesday.
After falling 18% in 1Q17, physical demand for gold seems to have picked up in 2Q17.
It’s always important to watch what analysts are forecasting for gold prices for in short and long terms. This helps investors understand gold’s price outlook.
In times of uncertainty, the value of paper currency erodes, giving credibility to gold.
One asset class that is still riding on “Trump trade” appears to be US equities —tech stocks, in particular.
The expectation of a Fed rate hike has been the most important factor weighing on gold prices in 2016 and 2017.
Since gold is priced into the US dollar, movements in the dollar have a bearing on precious metal prices, including gold.
The US added 138,000 jobs in May 2017, after adding 174,000 jobs in April (revised downward from 211,000 previously).