Gold and Silver Sell-Off After an Increase in Fed Funds Rate

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	The crypto leader Bitcoin has dipped to a three-month low, while Ethereum nosedived more than 8% during the day. . . .Pooja Sitaram Jaiswar

Last week, all the key financial indicators including precious metal prices dropped dramatically. After the New York stock exchange closed last Wednesday, Jerome Powell, Chairman of the Federal Reserve announced an increase of ¾% to the Fed Funds rate. After the announcement Chairman Powell gave a news conference. At that news conference, Chairman Powell gave no indication that the Fed would stop increasing Federal Reserve interest rates. That statement drove up the value of the U.S. Dollar Index (reaching 113) and U.S. Interest rates during Thursday and Friday trading. Many of the largest central banks follow the Fed by raising their national interest rates.

Powell made it clear that the Fed is focused on slowing down U.S. inflation at any cost. The Fed’s polices are driving up interest rates on homes, cars, credit cards, business and personal loans. The Fed is willing to drive the U.S. economy into a recession if it results in a 2-3% inflation rate. Energy and housing numbers are starting to drop, but food and services remain strong.

Gold reached a low of $1,640 per ounce last Friday, closing at $1,645.30, down $28 for the week. That is the lowest the Gold price has been since April 2020. Much of the weakness in the Gold price is the question, what is Russian Gold to do with their Gold? Looking at Chinese, Indian, and Turkish purchase for September may give us an answer.

Last week was ugly for Gold investors, with the price dropping to a 2-year low of $1,660.40 per ounce on Thursday. During August and early September, Gold tested the key $1,700 level and held. Gold traded below the key $1,700 level in heavy volume and set off the short-selling, which took Gold to the lowest price of the day. With another Federal Reserve meeting scheduled for this week and U.S. August retail sales surprising increase by 0.3%, precious metal markets are on the defense.

Today: The Gold price sold-off during Asian trading again, dropping $11 to a low of $1,634 before seeing a rally as the European commodity markets opened. The U.S. Dollar Index reached a high of 114.53 in overnight trading, continuing to put pressure on precious metal prices.

Silver was holding above the $19 level until last Friday. On Friday, the Silver price dropped, on the highest trading volume of the week, below the key $19 level following Gold. Silver reached a low of $18.70 before rallying back on the close to $18.84 per ounce. The Silver-to Gold ratio rallied back to 87.55-to-1.

Today: Silver followed Gold lower during Asian trading, reaching a low of $19.21 per ounce. But, like Gold, Silver rallied back in later trading above the $19.50 level.

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