January 26, 2018
The US central bank raised its discount rate by a quarter point to 2% on December 13, 2017. The Bank of Canada raised its key short-term rate by a quarter point to 1.25% on January 17, 2018, following similar hikes in July and September 2017. The European Central Bank on January 25 left monetary policy unchanged in spite of an increase in the euro and indicated that interest rates would not be raised during 2018. Both the US Federal Reserve and the Bank of Canada have left the impression that 2018 could experience three moderate rate increases in keeping with the expected economic growth rate. The US monthly trade deficit currently at $50 billion may be a contributing factor to a recent weakening of the US dollar. If this continues to manifest itself in the form of an increase in the rate of inflation certain commodities such as gold could rise. While bond yields remain low and certain stock market segments appear to be fully priced a holding in gold may very well have a place in any investment portfolio.