Gold and Silver After the Fed's First Hike in Three Years: Why Sovereign Demand Keeps the Metals Thesis Alive

The Fed just did something it had not done in three years: it raised rates. The 25 basis point hike to 3.75% to 4.00% was fully telegraphed, but the signal that at least one more hike is coming before year-end is exactly the kind of hawkish repricing that has historically flattened gold and silver, and Thursday's tape showed it.

The December gold contract closed at $4,339.20, down 1.12%, and spot slid under $4,300 to roughly $4,333. Silver tracked it lower, with the SLV ETF at $57.05, off 0.83%, while spot silver held near $64.41. On its face this looks like the first act of a familiar cycle: rates up, zero-yield metals down. Look one layer deeper and the picture is more complicated, because…