Gold falls in price to the minimum this year, the market responds to the rise in the benchmark interest rate of the Federal Reserve System (FRS) at December meeting and forecasts of faster further tightening of monetary policy in the USA.
Prices of precious metals with delivery in February fell to 1135-1140 U.S. dollars per oz troy.
Simultaneously silver gets cheaper, which immediately after decision of FRS on Wednesday fell in price by 3%, to 16.71 U.S. dollars per ounce, January contract for platinum lost 1.5% and fell to 926.70 U.S. dollars for ounce, but palladium with delivery in March is traded 1.1% lower the level of 14th December - at 724.25 U.S. dollars per ounce.
As anticipated by the economists, FRS raised both margins of interest rate range by 25 basis points to 0.50-0.75%.
However, the rate forecasts turned to be a surprise: the leaders of American CB expect three advances in 2017 instead of two presumed in September.
Moreover, the FRS management levelled up rate forecasts for the next 3 years: the median assessment by the CB leaders for the end of 2017 increased from 1.125% to 1.375%, for the end of 2018 - from 1.857% to 2.125%, for the end of 2019 - from 2.625% to 2.875%.
Raising interest rate by FRS commonly results in strengthening of the U.S. dollar, which impairs attractiveness of primary products, which prices are expressed in U.S. dollars (gold inclusive). The ICE Dollar Index jumped to the maximum over 13 years.
However, despite the fact that by the end of the year gold fell lower of a psychologically important level 1200 dollars per ounce, but silver as a more volatile metal has stepped into a falling trend at all, having lost18% from the summer maximums, closer to the end of the year the situation stabilized. At the same time the winning streak of the dollar to new peaks against euro stopped.
The presidency of Donald Trump, according to many experts, can entail inflation. The budgetary and tax incentives, far-reaching infrastructure projects – all these will result in price advance. And, as a traditional panacea for inflation – purchase of gold bullions and coins, fortunes of gold for growth look up. At the very least, the ounce of gold during 2017 can reach the maximums of 2016, which made 1370 U.S. dollars per ounce.