Gold

Top Stories This Week: Gold Drops on Fed Hike, Rick Rule's Top Sectors for 2023

Gold Investing
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Veteran investor and speculator Rick Rule said he sees opportunity in the uranium sector in 2023, as well as the oil and gas industry.

Editor's Picks: Gold Drops on Fed Hike, Rick Rule's Top Sectors for 2023youtu.be

The gold price rose as high as US$1,822 per ounce this week, but dropped off a cliff after the US Federal Reserve announced its latest interest rate hike. After falling as low as US$1,775, the metal finished at just over US$1,790.

The Fed hiked interest rates by 50 basis points on Wednesday (December 14), as was widely expected by market participants. The central bank has now raised rates seven times in a row this year, including four increases of 75 basis points; the target federal funds rate has reached a range of 4.25 to 4.5 percent, which is the highest level since 2007.

The Fed's aggressive upward push on rates has been a key element of its fight against inflation, and comments from Chair Jerome Powell indicate that it's not over yet. Speaking after this week's Fed meeting, Powell said that although recent inflation data shows "a welcome reduction," he'll need to see much more evidence before he believes it's on a "sustained downward path."


"The inflation data in October and November show a welcome reduction. But it will take substantially more evidence to give confidence that inflation is on a sustained downward path" — Jerome Powell, US Federal Reserve

The most recent consumer price index reading came out on Tuesday (December 13), and it shows inflation was up 7.1 percent year-on-year in November and 0.1 percent month-on-month. That's still well above the Fed's target of just 2 percent.

For precious metals enthusiasts, the key question is what all of this means for gold. Higher rates are typically negative for the metal, so continued hikes from the Fed likely aren't good news. At the same time, the US dollar continues to be a major headwind.

That said, investors remain optimistic — when we polled our Twitter followers on where the yellow metal will be at the end of 2023, more than half of respondents voted for above US$2,000, with less than 10 percent choosing below US$1,800.

Rick Rule sees opportunity in uranium, oil and gas

As we wrap up, I want to give a quick preview of my upcoming interview with veteran investor and speculator Rick Rule. It's always great to speak with Rick, and with the new year approaching I asked what sectors he thinks have the most potential in 2023.

Those who follow Rick probably won't be surprised to hear that his industries of choice are uranium and oil and gas, although he said investors need to make their own choices based on their approach to the market. For those focused on income and value, he pointed to the Canadian oil and gas sector, while for speculators he suggested uranium.

"I think now with the pace of Japanese restarts, (an increase in the uranium price is) imminent and inevitable. I think too because the uranium equities disappointed so many people, that while they aren't cheap they also aren't expensive" — Rick Rule, Rule Investment Media

We'll be posting the interview with Rick soon, so keep an eye on our YouTube channel.

Want more YouTube content? Check out our expert market commentary playlist, which features interviews with key figures in the resource space. If there's someone you'd like to see us interview, please send an email to cmcleod@investingnews.com.

And don't forget to follow us @INN_Resource for real-time updates!

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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