Dealing Desk: U.S. Fed Rate Increase Announced, Hawkish Outlook for 2017 Takes the Shine Off Gold

Goldmoney Wealth clients have been net selling all precious metals this past week.

Positioning themselves ahead of the Fed rate decision, most selling took place in gold and silver. Clients have preferred vaults in Switzerland, Singapore and London, and have shown less preference for the Hong Kong and Canada vaults.

Gold started the week at $1,164 and remained quiet ahead of the U.S. Fed rate decision on Wednesday. Silver was also cautious, starting the week at $17.16.

Gold fell to $1,150 then dropped to a 10-month low of $1,135 when the U.S. Fed raised interest rates and announced three rate hikes in 2017 instead of the expected two, while the decision caused the U.S. dollar to surge to a 14-year high.

“Though the gold price was sensitive to the interest rate and U.S. dollar fluctuations, other precious metals had mixed reactions; silver dropped while platinum and palladium remaining stable,” said Rachel Stonier, dealing manager at Goldmoney Wealth. “Precious metals will likely become a safe-haven investment for those looking to protect against political uncertainty and the specter of inflation seen in the U.S. in the new year, and current downward price movements position gold as a well-priced asset again.”

Gold finds and holds support at $1,100 this week with resistance at $1,170. Silver should be supported to not dip below $16.10 or rise higher than $17.25.

All precious metals declined week over week: Silver suffered a 5.8% loss and gold fell by 3.8%, while platinum posted a 3.6% decline and palladium at a 2.0% loss. The gold to silver ratio increased to 70.19.

15/12/16 16:00 GMT – Gold: $1,127.31; Silver: $16.06; Platinum: $906.71; Palladium: $711.93; Gold/Silver Ratio: 70.19.

NOTES TO EDITOR
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