Gold +1.8%, Silver +2.5% As Fed Increases Rates And Trade War Looms

– Gold gained 1.8% and silver 2.5% to $1,333/oz and $16.60/oz yesterday
– Gold climbs as Fed increases interest rates by 0.25% – now 1.5% to 1.75% range
– Dovish Fed Chair Powell plans fewer than expected rate hikes in 2018

– Markets disappointed at lack of hawkish comments from new Fed Chair 
– Dollar LIBOR rises to highest level since November 2008 – $200 trillion worth of dollar-denominated financial products including mortgages based off LIBOR

– Trade wars look set to escalate and Trump expected to announce tariffs on Chinese imports today

Editor: Mark O’Byrne


Gold in USD – 1 Week (GoldCore)

Gold gained 1.7% and silver 2.5% to $1,333/oz and $16.60/oz respectively yesterday after the Federal Reserve announced a 25 basis point increase in rates to the slightly higher range of 1.5% to 1.75%. Gold and silver consolidated on those gains overnight in Asia and this morning in European trading, as markets digested the Federal Reserve’s post-announcement comments.

The first Federal Reserve meeting chaired by Jerome Powell offered little in the way of surprise. A hawkish tone was expected from new Chair Powell, however his statement was slightly more dovish despite what he claimed was a strengthened economic outlook and confidence that tax cuts and government spending will provide an much needed boost.


Source: @JohnFeeney10

The Fed confirmed that there would be just three rate hikes this year, as stated in the December 2017 minutes. Currently the interest rate remains 50bp below LIBOR which continues to climb, widening the spread between itself and OIS.

Should this continue to worsen the impact could be greater on the economy and wealth, than Fed set interest rates. On this basis, the Powell and co. may well decide on additional rate hikes on top of the two expected this year and those forecast for 2019 and 2020.

Yesterday CME Group reported that speculative betting on future Fed rate rises in June are 84.4% likely (up from 58.5% a month ago) and September’s meeting 52.2% (jumping from 37.3% a month ago).


Data shows rising interest rates is positive for gold as seen in 1970s and again from 2003 to 2007. Source: New York Federal Reserve for Fed Funds Rate, LBMA.org.uk for Gold (PM fix)

 

Gold to find further support in trade wars

Later today President Trump will almost certainly announce tariffs on Chinese imports. The White House is said to be considering between $30bn-$60bn in tariffs and measures that would restrict investment. Yesterday the country’s top trade negotiator, Robert Lighthizer, told Congress the US will put “maximum pressure on China and minimum pressure on US consumers”.



Any changes to current trade arrangements will no doubt increase tension between the super powers. Many expect retaliation from Beijing (to any US measures) prompting a trade war and there is also the real of currency wars returning with a vengeance.

Elsewhere, EU leaders will today consider how best to respond to Trump’s decision to place tariffs on aluminium and steel imports, another move likely to trigger a trade war.

Recent Fed meetings and interest rate announcements have coincided with short term lows in the gold price and a good entry point for those looking to accumulate on the dip (see chart above).

We expect the same on this occasion and we should again test resistance at $1,360/oz in the coming weeks. Growing uncertainty and deepening risks will provide further support for gold and should see higher gold prices.

Listen on SoundCloud , Blubrry & iTunesWatch on YouTube below


Recommended reading 

Silver Soars 4%, Gold Consolidates On Dovish Fed

Federal Reserve Rate Hike At ‘Precisely The Wrong Time’ – Faber

Gold Gains Before Federal Reserve – Myth Of All Powerful Central Bank Continues

News and Commentary

Gold up on faltering dollar after Fed comments (Reuters.com)

Stocks Whipsaw Investors After Powell Rate Hike (Bloomberg.com)

Fed raises interest rates, but it’s sticking to cautious strategy for 2018 (MarketWatch.com)

Powell ‘Carefully Considering’ More Frequent Press Conferences (Bloomberg.com)

Fed raises rates, signals confidence in strengthening economy (Reuters.com)

Big week for central bankers on both sides of the Atlantic (MoneyWeek.com)

At $21 Trillion, The National Debt Is Growing 36% Faster Than The US Economy (ZeroHedge.com)

Recession: When You See It, It Will Be Too Late (ZeroHedge.com)

Why the Country Would Have Been Better Off With Bernie (BonnerAndPartners.com)

Morgan Stanley: “Soaring Libor Is The Story Of The Year, Not The Fed” (ZeroHedge.com)

Gold Prices (LBMA AM)

22 Mar: USD 1,328.85, GBP 939.36 & EUR 1,078.10 per ounce
21 Mar: USD 1,316.35, GBP 935.53 & EUR 1,071.64 per ounce
20 Mar: USD 1,312.75, GBP 935.60 & EUR 1,066.22 per ounce
19 Mar: USD 1,311.70, GBP 934.59 & EUR 1,066.41 per ounce
16 Mar: USD 1,320.05, GBP 945.42 & EUR 1,071.09 per ounce
15 Mar: USD 1,323.35, GBP 949.24 & EUR 1,070.72 per ounce
14 Mar: USD 1,324.95, GBP 949.59 & EUR 1,071.35 per ounce

Silver Prices (LBMA)

22 Mar: USD 16.52, GBP 11.64 & EUR 13.41 per ounce
21 Mar: USD 16.25, GBP 11.56 & EUR 13.23 per ounce
20 Mar: USD 16.25, GBP 11.60 & EUR 13.22 per ounce
19 Mar: USD 16.29, GBP 11.59 & EUR 13.24 per ounce
16 Mar: USD 16.48, GBP 11.79 & EUR 13.36 per ounce
15 Mar: USD 16.52, GBP 11.86 & EUR 13.37 per ounce
14 Mar: USD 16.61, GBP 11.88 & EUR 13.42 per ounce


Recent Market Updates

– Credit Concerns In U.S. Growing As LIBOR OIS Surges to 2009 High
– Four Charts: Debt, Defaults and Bankruptcies To See Higher Gold
– Crock Of Gold Hidden In Ireland? Happy Saint Patrick’s Day
– Buy Silver And Sell Gold Now
– Stephen Hawking – Doomsday Prophet’s Top Five Predictions
– Gold Cup At Cheltenham – Gold Is For Winners, Not For the Gamblers
– Hungary’s Gold Repatriation Adds To Growing Protest Against US Dollar Hegemony
– Stock Market Selloff Showed Gold Can Reduce Portfolio Risk
– Gold Protects As Cashless Society Threatens Vulnerable
– Women’s Pension Crisis Highlights Dangers To Savers
– London Property Sees Brave Bet By Norway As Foxtons Profits Plunge
– Gold Does Not Fear Interest Rate Hikes
– RaboDirect Closing – Gold May Protect From Irish Banks Going “Belly Up Again” – Finuncane

janskoyles

Also on news-goldcore-com

Videos

Gold Helps Me Sleep at Night

The King and Queen will be Gold and Silver

Jim Rogers Interview

Blog posts

Gold’s Role in the International System

Investors choose to invest in gold bars and buy silver bars because there is no counterparty risk. In a world where money is devalued every second and governments are scrambling to stay afloat, it’s worth holding some assets outside of the increasingly tenuous financial system. Below, we look at two countries who couldn’t agree more.  […]

READ MORE

What the World Cup can tell us about inflation

Football, love it or hate it, will dominate news outlets and Zoom small talk for the next month. Both the sport and the politics have entered the debating arenas, but there has been little mention of the whopping prize fund. Yes, football is one of the world’s largest industries, but is the prize fund just […]

READ MORE

The Bitcoin is ‘as-good-as-gold’ myth is over

When you invest in gold or buy silver coins with GoldCore you are choosing to invest in an asset that has no counterparty risk. Sadly those who have been holding their bitcoin on the crypto exchange FTX, have not experienced the same level of reassurance and service from the exchange’s management. This event is all […]

READ MORE

Featured

The King and Queen will be Gold and Silver

READ MORE
Newsletter
Category
Archives
Popular

No posts available

Videos

Gold Helps Me Sleep at Night

The King and Queen will be Gold and Silver

Jim Rogers Interview

Blog posts

Gold’s Role in the International System

Investors choose to invest in gold bars and buy silver bars because there is no counterparty risk. In a world where money is devalued every second and governments are scrambling to stay afloat, it’s worth holding some assets outside of the increasingly tenuous financial system. Below, we look at two countries who couldn’t agree more.  […]

READ MORE

What the World Cup can tell us about inflation

Football, love it or hate it, will dominate news outlets and Zoom small talk for the next month. Both the sport and the politics have entered the debating arenas, but there has been little mention of the whopping prize fund. Yes, football is one of the world’s largest industries, but is the prize fund just […]

READ MORE

The Bitcoin is ‘as-good-as-gold’ myth is over

When you invest in gold or buy silver coins with GoldCore you are choosing to invest in an asset that has no counterparty risk. Sadly those who have been holding their bitcoin on the crypto exchange FTX, have not experienced the same level of reassurance and service from the exchange’s management. This event is all […]

READ MORE

Featured

The King and Queen will be Gold and Silver

READ MORE