Gold And Silver Prices Move Up After Fed Minutes; Is More To Come?

Friday, February 24, 2017

silver and gold

With the Federal Reserve hinting that a rate hike may be in the works, the market is always primed to react. That’s just how things work when the Federal Reserve makes headlines these days. And with gold and silver prices moving up yesterday, there’s a clear market reaction—possibly linked to the idea of a rate hike.

But is there really more to come for silver prices, or is this simply a coincidence? Let’s explore.

Silver More “Subdued” Than Move In Gold Yesterday

While gold is up a significant portion this morning, the silver price, while healthy, has not moved up that much. It has eclipsed the $18 mark, however. Economic Times points out that this is a big move in gold and a more subdued move from its counterpart in silver.

The truth is, they’re not quite as different as you’d think. Gold’s price looks like it’s moving a lot more, simply because of the sheer numbers involved, but when you adjust for the precious prices of both metals, silver is hardly underperforming. As of this writing, gold is up $7.10, a 0.5% change and silver is up $0.21, or approximately 1%. This is one reason some investors look to silver for better returns—big swings in silver are easier to miss by the market at large, while big moves in gold are more obvious because of the numbers involved.

Is The Silver Price An Accurate Reflection Of Today’s Market?

With silver not moving quite the same way gold is, we’re left to wonder: is the price of silver accurately reflected in the market price, or is there upward or downward pressure that has yet to manifest?

It’s a difficult question because there are so many factors that go into determining the price of a commodity. There are those with more faith in silver because they believe that the market isn’t going to continue going up. Then there are those who see no reason the stock market can’t continue its bull status.

To determine whether or not silver is really accurately priced for its current level of demand, we have to look at the issues that silver will face in 2017.

Seeking Alpha Sees Rate Hikes Spelling Doom For The Silver Rally

Seeking Alpha is wondering aloud whether the idea of more rate hikes will put downward pressure on silver and end the rally we’re currently experiencing. If so, that could mean that now is a good time to get out of silver.

They point to silver’s different demand points, such as use in industry and in jewelry, as pushing silver upward. But the Federal Reserve acting to curb inflation could mean a stronger U.S. dollar, which in turn hurts the price of silver.

Since December, silver has seen a very impressive “rally.” But whether this represents a true bull market for silver or simply a nice little increase before Federal Reserve action curbs its potential…that remains to be seen as we wait for more economic headlines developing this year.

Darren Capriotti

Darren Capriotti has been a market analyst for the past decade and is an expert in precious metals. He prides himself on his ability to analyze the market and offer true value to investors with questions about gold, silver, and other precious metals. Highly educated, incredibly passionate, and more accurate than most, Darren offers a true, unbiased look into what investors can expect in the precious metals market. You can reach Darren at dcapriotti@gold-eagle.com.