Gold: With one rate hike out of the way, the Fed is keeping a steady hand on the tiller maintaining its forecast for three moves in 2017 and according to some analysts, gold investors are feeling a little more confident as Fed Chair Janet Yellen confirmed that the “neutral rates will be quite low.”Gold found momentum late Wednesday as the Federal Reserve left its forecasts basically unchanged from December. In her press conference following the central bank’s monetary policy decision, Yellen highlighted the fact that the central bank sees only a gradual pace of interest rate hikes.
“Gold is rising because investors feel more confident that that Fed is not going to increase rates rapidly this year,’ said Jeff Nichols, managing director at American Precious Metals Advisors and senior economic advisor at Rosland Capital LLC.Nichols added that even with the three rate hikes priced in this year, real interest rates are still expected to be negative,” which is positive for the yellow metal in the long run.
The Fed Speaks and Raises Short-Term Interest Rates by 25 Basis Points
As anticipated, today the Federal Reserve announced an interest rate hike at the conclusion of this month’s FOMC meeting. This wil raise the benchmark rate for Fed funds from .75 % to 1 %. This is the first interest rate hike in 2017 and the second rate hike in four months. However, when you look at the big picture, this is only the third interest rate hike since the beginning of the 2008 economic meltdown and the initiation of the quantitative easing program by the Federal Reserve.The net result of today’s announcement by the Federal Reserve was a relief rally in both gold and US equities. Once again they are running in tandem, with both moving to higher pricing. The Dow Jones Industrial Average gained 112 points to close at 20,950 with an increased value of over half a percent.
Copper: Another Copper Strike Sets the Case For a Price Rally
If I was a copper miner, I would be rubbing my hands because copper prices are looking healthy as a horse.
Workers at Cerro Verde mine in Peru put down there tools on Friday, halting output of 40,000 metric tons per month in a dispute over labor conditions I did about it for Swiss Financial Television). The strike stretched into its fourth day yesterday after a meeting between the union and management failed to resolve it on Monday. The mine is currently making about half as much copper as it normally does, because owner Freeport-McMoran hired contract workers to operate key areas.The action adds to disruptions at the world’s two largest copper mines, Escondida in Chile and Grasberg in Indonesia, which are losing production daily due to a strike and an export ban respectively.
Societe Generale Releases Base Metals Price Forecast for 2017
- Copper: average $6,000 per tonne in 2017, and will rise to $6,325 per tonne in 2018.
- Aluminium: average $1,800 per tonne in 2017, up from $1,725 per tonne previously expected.
- Nickel: average $11,000 per tonne in 2017, lower than the $12,000 per tonne expected previously.
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