• Gold: $ 1,282.43
      Silver: $ 15.43
      Platinum: $ 803.75
      Palladium: $ 1,356.88

    • Gold: $ 1,282.43
      Silver: $ 15.43
      Platinum: $ 803.75
      Palladium: $ 1,356.88

Precious Metals * Private Vaulting * Refinery

Fed Minutes Suggest Rate Hike Coming in December

Fed Minutes Suggest Rate Hike Coming in December

The United States Federal Reserve may be ready to begin raising interest rates next month, the minutes of the latest FOMC meetings revealed on Wednesday. Rather than continue to fall, gold prices bucked the downtrend in the latter half of the week, as investors closed out bearish positions, while others went bargain-hunting.

The minutes of the October 27-28 Federal Open Market Committee (FOMC) policy meetings indicated that “most participants” felt that conditions for a rate rise “could well be met by the time of the next meeting.”

“Most participants saw the downside risks arising from economic and financial developments abroad as having diminished and judged the risks to the outlook for domestic economic activity and the labor market to be nearly balanced,” the minutes added.

For investors, the October minutes were the strongest signal yet that rates will begin to rise next month for the first time in nearly a decade. US rate futures on Thursday suggested that investors saw a 72 percent chance the Fed will raise rates at the December 15-16 policy meeting.

Despite clear indication from the Fed about a possible rate hike next month, gold prices rallied $15 in the latter half of the week, while the US dollar softened against a basket of currencies. This suggests that a rate rise has been priced into the markets, signaling that gold may have found a bottom irrespective of what happens next month.

Peter Schiff of Euro Pacific Capital certainly holds this view. In an article to CNBC earlier this week, Mr. Schiff commented that “investors have been expecting a rate hike for quite some time.”

“In fact,” Mr. Schiff writes, “we are likely to get language that suggests a “one and done” reality… this could cause a “buy the rumor sell the fact reaction” that sends gold up rather than down.”

Nevertheless, a rate rise will probably weigh on non-yielding precious metals such as good and boost the US dollar, which has gained around 24% since July 2014. In fact, Goldman Sachs announced on Thursday that the US dollar is its top trade for 2016, citing the Fed as the main catalyst for the rise. While Peter Schiff is not convinced the dollar has much more upward movement left, its continued strength likely spells trouble for gold prices.

A growing number of financial analysts expect gold to fall closer toward $1,000 an ounce before the end of the year. Whether it stays there long-term is another question altogether. This will likely keep demand for the yellow metal elevated for the foreseeable future. For many physical investors, now is the absolute best time to buy gold.

 

 

If you’re looking to diversify your investment portfolio with physical precious metals, review Byzantium’s Blog for tips and educational resources. If you’d like to explore our precious metals catalogue, review our current inventory of gold bars and coins, or contact Byzantium directly for more information.

Husni “Sam” B, Byznaitum International Ltd SEZC

www.Byzantium.ky

O: +1 345-974-7000

 

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