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The Weekly Dig
Haywood Mining Team
Markets Jitter as Investors Prepare for Possible End-Of-Year Rate Rise
§ Today, Fed Chair Janet Yellen stated that the case for raising U.S. interest rates had strengthened in recent months because of improvements in the labour market and expectations for moderate economic growth. The Fed last raised rates in December last year, its first hike in nearly a decade, but has since held off further increases due to a global growth slowdown, financial market volatility and generally tepid U.S. inflation data. With an election looming, most commentators see a raise in September as unlikely; instead December looms as the month for a possible rate hike reflecting last year’s rise in December. However, the Fed again reiterated its position that if rates are raised, they will be done so gradually. As expected, markets were jittery on the news, having fallen during the week as bullish employment data heightened expectations of a positive economic outlook from the Fed; on Tuesday, the S&P/TSX Composite Index fell over one hundred points before stabilizing at 14,639 at close. Investors in gold and gold mining equities appeared to have anticipated the Fed’s tone, with gold falling 1.5% during the week, and finishing at $1.320 per ounce on Friday; silver (↓3.4%), platinum (↓3.9%) and palladium (↓3.2%) also fell, finishing at $18.61, $1,071 and $685 per ounce. Base metals followed a similar trend, with copper (↓4%) and nickel (↓5.6%) both finishing lower at $2.06 and $4.43 per pound; lead was down slightly (↓0.3%) while zinc bucked the trend, finishing higher at $1.05 per pound. WTI crude prices had a volatile week after inventories rose before finishing lower at $47.33 per barrel.
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