The gold price edged up on Friday (June 16) but was on track for a second weekly loss. The Federal Reserve decided to raise interest rates again by a quarter point earlier this week a move that was highly anticipated by the market.
The committee chose to raise rates again despite an economic slowdown at the start of 2017, which it predicts will be temporary.
Gold has been spooked by the hawkish tone from the Fed, which triggered some long liquidation both in futures and exchange-traded funds, said Saxo Bank analyst Ole Hansen.
Precious metals prices often drop with rising interest rates as some investors back away from the metal because it doesn’t pay interest.
Price action in both gold and silver of late seems to imply that traders still have plenty of short-term long positioning on their books, said OANDA analyst Jeffrey Halley. It may leaveboth metals vulnerable to a further washout into the weekend.
The announcement of the rate increase also boosted the US dollar, making commodities priced in the greenback more expensive for holders of other currencies.
The Fed foresees one additional rate hike this year, unchanged from its previous forecast and in line with experts’ expectations.As of 1:00 p.m. EST on Friday, the gold price was $1,254.42 per ounce.
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Looking over to silver, prices inched up on Friday but were also headed for a weekly decline after the Fed decision. The white metal is down more than 5 percent since reaching a high of $17.71 per ounce on June 6.
However, Peter Krauth, resource specialist for Money Map Press, predicts that the rate hike will help silver reach $22 by the end of 2017. As of 1:00 p.m. EST on Friday, the white metal was $16.70 per ounce.
Palladium was down 0.8 percent on Friday, trading at $862.75 per ounce. Platinum was up 0.1 percent for the week to $921 per ounce, after touching a one-month low on Thursday (June 15) at $913.50.
On the base metals side, copper steadied on Friday but was still on track for a weekly drop, its biggest since May following the increase in interest rates. Three-month copper on the London Metal Exchange was trading at $5,664.50 a tonne but down more than 2 percent over the week.
Lastly, spot oil re