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Top Stories This Week: Gold Gets Post-Fed Boost, Uranium Import Ban Gains Traction
Dec. 15, 2023 10:00AM PST
Gold took off after the US Federal Reserve held interest rates steady at its final meeting of the year. Meanwhile, legislation that would ban the US from importing enriched uranium from Russia made progress.
Gold took off this week, passing US$2,000 per ounce after the US Federal Reserve's final meeting of the year. It rose as high as US$2,043.13 on Thursday (December 14), and was at US$2,018.42 by midday Friday (December 15).
Although the central bank's decision to hold interest rates steady at 5.25 to 5.5 percent was widely expected, comments from Chair Jerome Powell have left market participants thinking that there won't be any more hikes.
In a press conference after the gathering, Powell said that "people are not writing down rate hikes" in their latest economic projections. The most recent dot plot, which shows where each Fed official thinks the federal funds rate is headed, points to at least three rate cuts in 2024, assuming each is 25 basis points. A further four cuts, again of 25 basis points each, are projected in 2025 for a full percentage point in reductions that year.
Gold tends to fare better when rates are lower, and the yellow metal was also supported this week by a weaker US dollar — in the aftermath of the Fed's pause, the US Dollar Index sank to levels not seen since midway through the year.
Of course, gold investors have been hurt before, and many are wondering if the current move up is real. Opinions vary, especially on the exact trajectory the price could take. But I recently heard from Gareth Soloway of VerifiedInvesting.com, who said he thinks the increase is legitimate — he also chose gold as his top-performing asset of 2024.
"According to what I'm seeing, yes it is a real move for gold. Eventually we will finally get above that US$2,080 level that we keep on hitting or piercing and then getting repelled back off of" — Gareth Soloway, VerifiedInvesting.com
We'll be posting the interview with Gareth next week, so stay tuned.
US moves closer to banning Russian uranium imports
Last week's update covered how the US House of Representatives was set to vote on legislation that would ban imports of enriched uranium from Russia. Called the Prohibiting Russian Uranium Imports Act, it would bar Russian uranium imports 90 days after enactment, although it would allow a temporary waiver until January 2028.
The act was approved by the House on Monday (December 11), and while it was presented to the Senate on Thursday, Republican Senator Ted Cruz (R-TX) blocked it from passing quickly. Even so, given that Cruz is the only dissenter, uranium market watchers are confident it will ultimately be successful.
At the same time, Bloomberg reported that a Russian state-owned uranium company is warning its American customers that if the US ban goes into place, Russia may preemptively put its own ban on exports of the energy fuel to the US.
The news comes from "people familiar with the matter," and the American customers that have reportedly been warned include Constellation Energy (NASDAQ:CEG), Duke Energy (NYSE:DUK) and Dominion Energy (NYSE:D).
After years of dormancy, positive catalysts are emerging for the uranium sector on what seems like a daily basis, and the spot price continues to climb higher. We’ll be watching closely so we can keep you posted on future developments.
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Securities Disclosure: I, Charlotte McLeod, hold no direct investment interest in any company mentioned in this article.
Editorial Disclosure: The Investing News Network does not guarantee the accuracy or thoroughness of the information reported in the interviews it conducts. The opinions expressed in these interviews do not reflect the opinions of the Investing News Network and do not constitute investment advice. All readers are encouraged to perform their own due diligence.
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