On December 20th, prices for gold stocks stood at $1127 US, seeing a downfall of 3.1%, which is the lowest since January. Gold prices have fallen almost 17% from its peak in July, after a roaring start of the year.
Federal Reserve Chair Janet Yellen has strengthened the possibility of further hikes in 2017. Here’s a summary of what she said:
On the morning of the 19th, Yellen said the US labor market has grown up to its strongest form of this decade, implementing a growth in wage and strengthening underscoring expectations for which the Central Bank will continue to raise interest rates into the following year.
The Bank of Japan is preparing a steady monetary policy, allowing for a more favorable view of the economy, and thereby reinforcing market expectations that speak of any increase in future policy making direction without a cut in interest rates.
Economic growth in China is expected to cool in 2017, as the tight monetary policy of its top leaders curb to clamp down on the property market’s asset price bubble. A sharp drop of the Yuan can lead to further market turmoil.
The SPDR Gold Trust holding fell by 1.06% to 828.10 tons on Dec. 19th. It is the world’s largest gold-backed exchange-traded fund.
The Macquarie Group sees average gold price forecasts in 2017 at $1216 US an ounce and is down 11.9% standing from all previous forecasts and is also estimating the 2018 scenario to hold at $1375 US an ounce.
The Singapore kilobar Gold Contract of the Singapore Exchange Ltd. is all set to be the first spark in the Shariah-compliant gold futures. It holds the world’s largest gold-backed exchange-traded fund.
“Although almost every market participant expected a rate hike, gold has taken a significant hit since yesterday’s [Dec 14th] move by the Fed,” said RBC Capital Markets commodity strategists in a note.
“In the context of the most recent fall in gold prices, we think a buying opportunity should present itself before or during the first few months of 2017, once we get through the worst of the recent price action.”
Appeal of the yellow metal is boosted in times of political uncertainty because it is considered a safe haven for all investors. The sudden volatility in the prices of this metal has been noticed following the election of the recent US President Donald Trump.
The Fed has stated an additional surge in the dollar after implementing its current interest rate decision.