The Fed’s rate rise decision and its hawkish outlook for 2017 crunched gold badly overnight, driving it to 11-month lows, with the prospect of more to come.
Not even the prospect of an unstable Donald Trump administration (Sylvester Stallone in the administration, can you believe it?) can change sentiment about gold at the moment.
The Fed’s implied forecast of three rate rises next year was given more support by more credible economic data in recent weeks.
But some analysts auction that the Fed reckoned there could be four rate rises this year when unveiling the first rate rise in a second a year ago.
It is going to head further south unless there is a dramatic new crisis in the middle east or Russia (for example).
Comex gold futures for February delivery dropped $US33.90, or 2.9%, to $US1,129.80 an ounce, that’s lowest settlement since February 2, and the largest single-day dollar and percentage loss since November 11.
That is going to hit Australian gold stocks like Newcrest hard when trading resumes this morning.
The metal trimmed its loss to around $US29 an ounce in early Asian trading and around $US1,133 an ounce.
Gold traded as low as $US1,124.30 after the Fed rate cut news, but the metal managed to end Wednesday’s session at $US1,163.70 an ounce – a 0.4% gain.
Silver took a whack with Comex futures dropping $US1.26, or 7.3%, to $US15.958 an ounce, the worst finish since June.
Comex March copper lost less than half a cent to $US2.601 a pound.
US oil futures traded down slightly to just under $US51 a barrel in New York.
The Aussie dollar remained well blow 74 US cents at 73.65 this morning. That will help ease the pain of the big slide for gold miners who operate in Aussie dollars. Newcrest doesn’t.
The fall in the Aussie will also hurt other companies such as QBE, BHP Billiton, CSL and Rio Tinto who price in greenbacks.
