Once Fed Hikes Rates, Precious Metals To Move Higher - Phil Newman

As markets try to figure out when the U.S. Federal Reserve will start to normalize interest rates, one metals analyst says it is important to focus on the central bank’s monetary policy decisions in order to gauge the precious metals' direction, particularly gold. Commenting on the looming U.S. rate hikes, Metals Focus’ Phil Newman said he thinks it is the biggest issue for the precious metals markets from a price point of view. ‘Of course, it’s a bit of a moving target. If you look at the sentiment in the market, it’s very much shifted for rates to be increased in 2016 now,’ he told Kitco News at the London Bullion Market Association (LBMA) annual conference, held this year in Vienna, Austria. Looking at silver, where there was a significant influx of retail demand on lower prices, Newman said he doesn’t see these types of retail surges having a significant impact on the metal’s price. ‘Retail investment demand is very important for the metal but in volume terms, it’s still quite modest in terms of overall silver demand,’ he explained. 'What you really need is to have institutional demand come back into the market and that will be a key determinant to see prices move higher for silver.’ Overall, Newman expects the precious metals to encounter weakness once the Fed raises rates; however, once that first move is made, the metals may move higher. 'We should probably see more weakness come back when the rate hike actually does happen,’ he said. 'Once that’s out of the way, that should really clear the deck for prices to start moving higher in sort of a gradual way, more constructively for the longer term.’ October 22, 2015. (show less)

As markets try to figure out when the U.S. Federal Reserve will start to normalize interest rates, one metals analyst says it is important to focus on the central bank’s monetary policy decisions in order to gauge the precious metals' direction, particularly gold. Commenting on the looming U.S. rate hikes, Metals Focus’ Phil Newman said he thinks it is the biggest issue for the precious metals markets from a price point of view. ‘Of course, it’s a bit of a moving ... (read more)

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