This week the Fed announced the widely expected rise in the Fed Funds Rate to a target of 0.5 – 0.75%, with the expectation that there will be three more rises over the course of 2017. Predictably, the gold price got hit yet again, sliding $26 dollars from last Friday’s close to $1132.50. Silver lost 88 cents to $16.05 by early European trade this morning.
Gold is now up only 6.3% on the year in dollars, having been as much as up 29% mid-year. Silver is up 16% having been up 49% on 2nd August. Gold’s weakness is the counterpart of dollar strength, but with industrial metals rising strongly (copper is up 22% since 1st October, while gold is down 14%) valuations are getting stretched. The strength in base metals has helped silver relative to gold, reflected in the chart of the gold/silver ratio.
This post was published at GoldMoney on DECEMBER 16, 2016.