Wednesday was one of the most confusing trading days of the summer, and precisely for that reason one of the most interesting for anyone considering selling old gold or silver. The US central bank held its policy rate steady, yet three officials voted against it, demanding a hike instead, something that had not happened since 2016. At the same time, the war around Iran flared up again, oil jumped 7 percent and Wall Street lost more than eleven hundred points in a single day. You would expect gold to swing wildly. In reality, it barely moved.
Three officials demand a higher rate, the first time since 2016
The Federal Reserve held its policy rate steady on Wednesday for the fifth meeting in a row, between 3.50 and 3.75 percent. On the surface, a dull and expected decision. Yet three regional Fed bank presidents voted against it, Beth Hammack of Cleveland, Neel Kashkari of Minneapolis and Lorie Logan of Dallas, all wanting a 25 basis point hike instead of a hold. Opposition this unified and this direct toward Chair Kevin Warsh had not been seen since 2016.
A family fight, as requested
Warsh himself did not seem to fear the divide.
I asked for a good family fight, and I got one.
He also stressed that there is no soft inflation target for the Fed, only the official target of 2 percent, and that five years of above target inflation cannot be fixed in nine weeks or by a single month of milder figures. That tone confirms that the Fed, despite holding steady, remains far from comfortable about inflation.
Oil jumps, Wall Street sinks, yet gold stays calm
While the Fed was still meeting, the ceasefire around Iran struck earlier this month proved short lived. After fresh US and Saudi strikes on Tehran backed militias, Iran itself fired missiles at US forces in the region. The oil price reacted immediately and sharply, with Brent crude closing 7.3 percent higher around 88 dollars a barrel. Stock markets took a double hit, from the Fed’s hawkish tone and from pricier oil at the same time. The Dow Jones closed 2.19 percent lower, a loss of more than eleven hundred points, the S&P 500 fell 1.52 percent and the Nasdaq 1.74 percent.
Anyone reading this would expect a sharp move in gold. It did not happen. The gold price swung on Wednesday between roughly 4,000 and 4,050 dollars per troy ounce, a change of at most a few tenths of a percent, while silver held near 57 dollars. On Thursday too, both metals stayed within that same calm band.
Why the gold price moved so little despite the chaos
The explanation lies in two forces that nearly cancelled each other out. The three dissenting Fed votes raised the odds of a rate hike later this year, and a higher rate usually makes gold, which pays no yield of its own, less attractive. At the same time, the renewed war threat around Iran pushed the other way, through the classic demand for gold as a safe haven. The result was not a sharp move but an uneasy balance, even as oil and stocks swung hard in both directions.
What this means for anyone selling old gold
For anyone with old gold, jewellery, coins or silver cutlery at home, the bigger picture does not change. Both metals still trade well above where they stood a year ago, even after a day when the Fed proved as divided as it had not been in six years and the war around Iran flared up again. But a market absorbing a historic Fed split, a 7 percent oil shock and a sharp stock sell off all at once is by definition an unpredictable market. In the days ahead, the rate could, after this apparent calm, still swing sharply in either direction, especially as the Fed’s September meeting draws closer.
Anyone considering a sale is therefore well advised not to rely on a rate seen a few days earlier, but to have the value of their pieces assessed on the spot by a recognised buyer who applies the actual rate of the day. That way, it is not the chance of the day but the real value of the gold or silver itself that is reflected in the price.