With perhaps the most important decision for commodity prices for some time having been actioned on Wednesday with the Federal Reserve lifting its key interest rate for the first time in nearly a decade, commodity prices witnessed subsequent pricing volatility, and strengthened on Friday. Such market vacillation will ultimately demonstrate whether Split Enz’s assertions of ‘History Never Repeating’ are correct for the country’s new rate-rising cycle.
In its decision, the Fed cited what it believed to be a resilient recovery of the U.S. economy following the 2007 to 2009 financial crisis. In the end, the rate hike seemed a mere formality following mostly robust domestic macroeconomic data, despite continued turmoil in overseas markets in Europe in particular.
The immediate reaction to the rate hike was surprisingly muted, with gold in particular remaining steady around the $1,070 per ounce level for most of the day. However, despite a negative day for commodities on Thursday, gold finished at $1,065 per ounce on Friday, while silver, platinum and palladium finished at $14.09, $859 and $558 per ounce respectively. Copper and nickel prices were also initially subdued immediate following the announcement, but enjoyed a Friday rally to finish up at $2.11 and $3.96 per pound Friday.
Major US indices responded with a delayed negative reaction to the news, and on Thursday and Friday traded down with the Dow Jones Industrial Average closing at 17,129, while the S&P 500 Index closed down at 2,006.
Stocks mentioned: Osisko Gold Ro (TO:OR),Reservoir Minerals Inc (TO:RMC), ProShares Short SmallCap600 (N:SBB), Klondex Mines Ltd. (TO:KDX), Royal Nickel Corporation (TO:RNX), Detour Gold Corporation (TO:DGC), Barrick Gold Corporation (TO:ABX), Lundin Mining Corporation (TO:LUN).
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