Gold Retains Post-Fed Gains

September 22nd, 2016 by

pile-of-gold-rallyGold prices held on the Wednesday afternoon’s Fed-inspired gains overnight, even as stocks in Asia and Europe posted gains. Spot gold is trading slightly more than $2 over yesterday’s closing price of $1,334.90. This was a $20.30 (1.54%) gain for the yellow metal, and the best one-day performance since September 6th. This morning’s price puts December gold futures more than $5 ahead of Wednesday’s close.

Silver is making another run at the $20 mark this morning, having gained roughly a dollar over the last seven days. Spot silver closed up 61 cents (3.18%) higher Wednesday, at $19.82. December silver futures gained 49 cents to close at $19.77 an ounce.

Wall St opened higher this morning, continuing yesterday’s 1% rally on the news that the Fed did not hike interest rates. No one in their right mind expects a rate hike in November, since the FOMC meets six days before the Presidential election, so this moves the earliest possible time for a rate hike to December 14th.

dollar-fall-weakerThe dollar is seeing accelerating losses this morning, after the DXY dollar index closed moderately lower after yesterday’s Fed announcement. Bonds reacted much as expected yesterday afternoon. Yields on short-term Treasuries rose as investors sold off their holdings ahead of an imminent rate hike, while the yield on the long bonds fell as investors increased their buying.

The Energy Information Administration surprised oil markets for the third straight week yesterday, showing yet another draw on US crude stockpiles. Oil market analysts were predicting a build of 2.8 million barrels, but the EIA reported a 6.2 million barrel draw. This news combined with a weaker dollar to allow oil prices to close with a 2.9% gain, settling up by $1.29 to $45.34 a barrel. Crude markets are continuing to rally this morning, up 2% or more.

The SPDR Gold Trust (GLD) gained 1.4% yesterday, while the VanEck Market Vectors Gold Miners ETF (GDX) jumped a whopping 5.3%. The iShares Silver Trust (SLV) gained 2.5%.

layoffs-unemploymentThis morning’s news that first-time jobless claims last week dropped by 8,000 applications had no effect on gold or the dollar. A report that existing home sales unexpectedly dropped gave the dollar a little extra boost, while the USD remained mired deep in the red. The measure of US Leading Economic Indicators today surprised economists with a -0.2% print. This comes after a much-stronger 0.5% gain for July.

gold-rally-kingFamous gold miner and former investment banker Robert McEwen told the audience at a gold market symposium in Colorado that he sees gold prices hitting a range of $1,700 to $1,900 an ounce by the end of this year. He noted that ” [T]he big argument against gold used to be it costs you money to store it. Right now, it’s costing you money to store your cash.”

 

The opinions and forecasts herein are provided solely for informational purposes, and should not be used or construed as an offer, solicitation, or recommendation to buy or sell any product