Weekly Round-Up: Eyes on the Fed Following Black Monday

It’s been a tumultuous week for gold, which took a major hit in the aftermath of Black Monday.
Though the yellow metal finished that day at $1,154.90 per ounce, not far off from the day’s high of $1,166.20, it continued to decline on Tuesday, Wednesday and much of Thursday. Fortunately for gold bugs, after hitting a weekly low of $1,121.60 Thursday, the gold price began to perk up a little. As of 4:00 p.m. EST on Friday it was sitting at a fairly respectable $1,134.30.
Explaining that price activity, Kitco’s Allen Sykora states that the meltdown at the beginning of the week ultimately led to some safe-haven demand for gold. However, towards the end of the week equities recovered, tempering gold’s appeal somewhat. “Gold also reacted to oscillations in the U.S. dollar,” he notes.
Heading into the next couple of weeks, the US Federal Reserve will be a key factor for gold-focused investors to watch. According to Reuters, on Friday the central bank “left the door open to a September interest rate hike.” While an interest rate hike has long been expected before the end of 2015, the recent market turmoil has raised questions about whether it will in fact happen. A key Fed policy meeting is scheduled for September 16 to 17.

The silver price fared even worse than gold did this week. September futures hit a six-year low of $14.04 per ounce on Wednesday, and while the white metal has since bounced back — it was at $14.60 as of 4:00 p.m. EST on Friday — its future will also likely rest heavily on the coming Fed rate hike decision.
On the base metals side, copper too took a hit following Black Monday. Recently it’s been testing the $2.30-per-pound level, and that day it finally dipped below it to reach $2.25. However, Friday saw COMEX copper futures for December delivery rise 0.8 percent to reach $2.346 — that’s the highest close since August 14, as per The Wall Street Journal.
Finally, it was a topsy-turvy week for oil. Monday saw prices drop “fresh six-year lows,” but by the end of the week they had improved. According to another Wall Street Journal article, light, sweet crude for October delivery was up 2.8 percent, at $39.31 per barrel, on the NYMEX on Friday. Meanwhile, Brent crude was up 1.2 percent, at $43.21 per barrel, on the ICE Futures Europe.
Amrita Sen, market analyst at Energy Aspects, told the news outlet, “[a]nything the (Chinese) government does that is viewed as credible will help the market. [However], the broader theme is still that demand is very robust and it’s the supply side that’s been the problem…Prices need to be lower for longer to make sure the supply side start reacting.”

 
Securities Disclosure: I, Charlotte McLeod, hold no direct investment interest in any company mentioned in this article. 
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