Gold and silver are falling even though gold is often seen as a safe-haven asset and both metals can be thought of as inflation hedges. MarketWatch columnist Michael Kramer points to a stronger dollar, higher interest rates and the prospect of more Fed rate hikes.
Interest rates and the dollar have run higher since Nov. 6 after the jobs, CPI and PPI reports, writes Kramer, founder of Mott Capital Management. In his view, the data suggest a strong labor market and inflation that won't slow down.
That gives the Fed a reason to raise rates again at its December meeting, Kramer says, and the potential to signal even more rate hikes in 2027. He argues this will not be good for gold or silver.
The weakness may surprise some investors, because gold is often seen as a safe-haven asset. Yet Kramer says gold has performed horribly this year, despite geopolitical tensions and uncertainty.
Silver and gold can also be thought of as inflation hedges. Even with inflation running near 4%, Kramer says neither metal is working as intended.
Source: MarketWatch
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