As investors hope for a Santa Claus rally in the days ahead, the Grinch is looking to steal their holiday cheer.
Federal Reserve chairman Jerome Powell announced another interest rate hike on Wednesday – this time by half a percentage point. Although the bump up in rates was smaller than previous hikes this year, it wasn’t exactly the pivot stock market bulls had wanted.
They fear the economy is already heading for a deep recession next year and worry any additional increases in borrowing costs could destabilize the highly leveraged financial system.
Stocks got pounded on Thursday. Precious metals markets succumbed to the broader selling pressure as well.
As of this Friday recording, gold is registering a weekly loss of 1.5% to bring spot prices to $1,797 an ounce. Silver, meanwhile, has fallen by 1.6% for the week to trade at $23.33 per ounce. Platinum is off 4.1% to come in at $1,001. And finally, palladium is taking a 11.5% gut punch this week to trade at $1,789 per ounce.
Metals markets had been performing strongly over the past two months. This week’s sell-off doesn’t necessarily mark a change in that trend. So far it’s merely a pullback.
There is, of course, a chance that interest rate jitters could spark further downside volatility in gold and silver prices. But persistent inflation pressures are likely to provide a longer-term floor underneath hard asset markets.