Fed Hikes Interest Rate, Precious Metals Rebound: What’s Ahead?



Precious metals rebound

Precious metals rebounded after the Fed increased the interest rate on December 13. On December 15, 2017, gold futures for January expiration rose 0.04% to $1,255.80 per ounce, silver rose 0.79% to $16 per ounce, and platinum rose 0.93% to $889.40 per ounce. In contrast, palladium fell 1.3% to $1,026.20 per ounce.

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Mining funds and miners

Gold and silver price fluctuations are shown in the chart above. Going forward, markets will likely be concentrating on potential effects of US tax reform on the US dollar and precious metals. Reform uncertainty could further hurt the dollar and boost gold. Precious metals usually react to overall market risk. With market unrest, precious metals generally outperform other commodities. In the next article, we’ll discuss the relationship between gold and the dollar.

Precious metals’ rise could also boost the iShares Gold Trust ETF (IAU) and the iShares Silver Trust ETF (SLV), which rose 0.17% and 0.87%, respectively, on Friday. Mining stocks’ reactions were mixed. While Sibanye Gold (SBGL) and AuRico Gold (AUQ) rose 4.5% and 3.6%, respectively, Franco-Nevada (FNV) and Alacer Gold (ASR) fell 1.3% and 1.5%.


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