Could Gradual Hike Result in Gradual Loss for Precious Metals?



“Gradual” was the keyword

The FOMC (Federal Open Market Committee) emphasized the word “gradual” in reference to the rate hike. This emphasis may have likely buoyed precious metals, as they didn’t react very much to the Fed’s decision. Investors unanimously expected a fall in value assets like gold once the rates rose above zero. However, the fall didn’t occur, and gold added $15 to its previous day close, 1.4% higher at $1,076.8 an ounce on Wednesday, December 16.

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Silver was the best-performing precious metal, as it surged 3.5% and ended at $14.3 per ounce. The volume in silver futures, however, remained significantly low compared to the previous trading days. Below is a chart that shows the three-month performance for silver. With the gain in silver, the RSI (relative strength index) rose from 28 to 43. A figure below 30 indicates a possible bounce back in the asset price.

The progressive stance of the Federal Reserve may result in a more gradual reaction from the precious metals in the coming days. Platinum and palladium gained 2.4% and 0.88% and closed at $876 and $572 an ounce, respectively.

Silver miners and ETFs

The hike in silver prices boosted the silver-based ETFs like the iShares Silver Trust (SLV) and the Global X Silver Miners ETF (SIL). These two indicators rose 2.9% and 3.7%, respectively, on Wednesday. Silver mining businesses like Silver Wheaton (SLW), Pan American Silver (PAAS), and Coeur Mining (CDE) all gained on the rise in silver prices. These three companies rose 2.5%, 6.4%, and 7%, respectively. Together these companies make up about 7% of the price fluctuations in the VanEck Vectors Gold Miners ETF (GDX).


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