Week of December 16th Silver Market Update

As of the writing of this post during the early afternoon hours of Tuesday, gold and silver spot values are moving downward. After beginning the day posting solid gains, metals have went the way of crude oil and are beginning to pile on the losses for a second consecutive day. After big gains were made just about a week ago, spot values have since conceded much of that value and are more or less back to square one. With very little economic data on this week’s slate, I anticipate that it will continue to be difficult for precious metals to make gains in a market that is as bearish as this current one is.

In this void of economic data, investors the world over are focusing on the latest FOMC meeting, which kicked off this morning and is set to wrap up sometime tomorrow afternoon. With interest rate hikes continuing to dominate talks regarding the US economy, global investors will be paying close attention to this meeting for any further clues regarding rate hikes.

FOMC Closely-Eyed by Market

As is always the case, the market is paying close attention to this week’s Federal Open Market Committee meeting. With an interest rate hike announcement expected to be delivered in the wake of the meeting Wednesday afternoon, investors are gearing up to prepare for a drastically different market atmosphere. With that said, however, there is absolutely no way to ensure that the FOMC will be delivering a rate hike announcement upon the conclusion of their meeting tomorrow.

Regardless, precious metals investors will be paying close attention to the meeting simply because of the possible implication rate hikes might have for gold and silver spot values. You see, if interest rates are raised, investors will naturally become more interested in interest-bearing assets and, as such, will become less interested in the safe-haven qualities derived by precious metals. In addition to the negative implications rate hikes might have for gold and silver in the long-term, there are short term implications as well.

For one, there are a lot of investors who seem to be convinced that a rate hike announcement will immediately drive down the spot values of gold and silver . While this is a possibility, the reality is that gold and silver’s immediate reaction to a rate hike decision will more than likely not cause that much of a shockwave to spread across the global marketplace. This is so because the market has been expecting a rate hike announcement for some time now, so if it does actually happen, no one will be taken aback or in any amount of shock. Still, it will be interesting to see how the market will react to tomorrow’s FOMC post-meeting statement.

Posted in Market Updates

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