Federal Fund Rate, Primary Credit Rate and PM

Hemispherical

The Federal Reserve raised the target range for the federal funds rate to 2.25-2.5% from 2.00-2.25 and the primary credit rate from 2.75% to 3.00% in the Dec 18 FOMC.

Usually when these rates go up the rates for consumer borrrowers and savers go up as well.

How does this affect the PM market? Or does it?

derryb

The general consensus is that rising rates are bad for PMs. However, rising and higher interest rates may be bullish for gold prices, simply because they are typically bearish for stocks. Note that while rates went up yesterday, gold initially saw a drop but is even higher today.

ricko

When it comes to gold, my philosophy, which has evolved over these many years, is 'Buy it, hold it, ignore it.' Until you decide to liquidate. JMPO....Cheers, RickO

jmski52

Precious metals markets depend a lot upon psychology. That's why when the plunge protection team goes into action to support the stock market and to hammer gold in the process - they are mainly seeking to influence investor psychology in favor of stocks and against gold. If you are a longterm buy & hold, with a strategy of averaging in & averaging out, the market gyrations are much less of a concern.

re: the OP's question - the metals can react to changes in interest rates in either direction, but the reaction is based on the prevailing investor psychology at the time.

VanHalen

Jerome Powell's neck is in the guillotine and the PPT is oiling the bilge pumps on Christmas Eve.

It's Christmas though so let's try to see the silver lining. There are many for most of us.

derryb

can't lower rates later if you don't raise them now.

jmski52

It's Christmas though so let's try to see the silver lining. There are many for most of us.

Good point, VH. We have led charmed lives in this Constitutional republic that we were gifted, and even when things don't look the brightest, they are better than most places and most times throughout the history of mankind. Merry Christmas to all!