Federal Reserve Policies Clear as Mud Concerning Precious Metals’ Future

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Gold, silver and bronze

Federal Reserve Chairwoman Janet Yellen said yesterday that, while it will not increase the federal funds interest rate, the Fed could begin to raise interest rates whenever economic data indicates it can.

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“The decisions that the committee makes regarding the appropriateness of the time to commence increasing its target for the federal funds rate will be data dependent,” Yellen said. “Should the goals set by the Fed look to be accelerating in terms of being achieved earlier, then it is likely that the federal funds rate rise could be introduced earlier than expected.”

The Fed, as expected, said it would end its “quantitative easing” bond buying program next month. Many in the market wondered if it would then signal a relatively brisk move to raise interest rates from near zero, where they have been since 2008. It did not. The strengthening dollar has hurt investment metals such as silver and gold as their value as a hedge has been muted. While the end of QE will likely help the investment metals the interest rate picture remains murky at best.

On Thursday, September 18, the day’s biggest mover was US palladium bar, which saw a 1.2 percent decline to $830.00 per ounce. Japanese palladium bar saw little change in its price yesterday at JPY 2,947 ($27.50) per gram. At CNY 184.00 ($29.96) per gram, the price of Chinese palladium bar was essentially unchanged.

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US platinum bar closed 1.0 percent lower at $1,348 per ounce. The price of Chinese platinum bar held steady at CNY 287.00 ($46.74) per gram. The price of Japanese platinum bar showed little movement yesterday at JPY 4,693 ($43.80) per gram.

The price of US gold bullion fell 0.9 percent to $1,223 per ounce. Chinese gold bullion stayed flat at around CNY 245.25 ($39.94) per gram. The price of Indian gold bullion held steady at INR 27,177 ($446.38) per 10 grams. The price of Japanese gold bullion remained essentially flat at JPY 4,257 ($39.73) per gram.

The price of US silver changed direction with a 0.9 percent drop. After two days of improving prices, the metal finished at $18.52 per ounce. The price of Chinese silver ended a two-day climb, settling at CNY 4,145 ($674.97) per kilogram. At INR 41,497 ($681.58) per kilogram, the price of Indian silver was essentially unchanged. Japanese silver stayed flat at around JPY 639.00 ($5.96) per 10 grams.

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