Gold, Oil, Dollar Outlook after Fed Rate Move

Markets edged up after opening lower on Friday following the Federal Reserve's decision to raise the discount rate. How is the Fed’s action affecting the currency and commodities markets? Peter Sorrentino, senior portfolio manager at Huntington Asset Advisors, Peter Beutel, president of Cameron Hanover, and Boris Schlossberg, director of currency research at GFT Forex, shared their expertise.

Currencies:

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The dollar briefly pared some of its gains versus the euro and the yen.

“If currencies were Olympics, Asia Pacific still gets the gold, North America carries the silver, Europe a very distant bronze and the UK right now is collecting tin,” Schlossberg told CNBC.

“As far as the dollar itself goes, the economic recovery is strong, but we still have some potholes in the road.” (Track Major Currencies Here.)

In particular, Schlossberg is keeping his eye on the employment numbers.

“Assuming we see improvement in U.S. economic performance, we'll definitely see strength to the dollar,” he said. “The dollar/yen could go to 95 and euro/dollar goes to 1.33.”

Gold:

Gold rose in Europe, having recovered early losses related to a surge in the dollar, as the U.S. currency pared gains and investors bought the metal to hedge against volatility in the foreign exchange markets.

“Metals unfortunately have been vastly influenced by the liquidity injections,” said Sorrentino. “Longer term, there’s a greater case to be made on the commodity side. Right now, you can look at some of the counter-trends.” (See Gold & Silver Futures Now)

He advised investors to look into silver as a “catch-up trade” because it has been lagging behind gold.

“Gold probably marks time until we get to see what really happens on the monetary and fiscal front,” he said.

Oil:

Oil prices were steady near $79 a barrel after a smaller than expected rise in U.S. consumer prices calmed earlier fears that monetary tightening could slow U.S. demand growth.

“You cannot sell oil in March—it’s insanity,” said Beutel. “If you had bought June gasoline in the beginning March, in 24 out of the last 25 years you’d have made profits by May—10 cents a year and over the 4 last years, 35 cents a year.” (Oil and NatGas Prices Now)

Beutel said he continues to be concerned about issues in Iran.

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Disclosures:

No immediate information was available for Beutel, Schlossberg or Sorrentino.

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