Next week is shaping up to be pivotal. The previous Fed rate hikes were positive for precious metals. However, they were greatly anticipated and spaced 12-months apart. Effectively it became a “sell the rumor and buy the news type event.” Gold traded lower before each rate hike, and the technicals were oversold. Prices bottomed within a few days of the rate increase.

This time is a little different. The last increase was just 3-months ago, and gold prices aren’t nearly as oversold. Therefore, it is unclear how they will react to another hike. The probability for an increase is sitting around 90%.

The previous rate hikes (see charts), drove gold lower the day of or the day after the official announcement. Miners had mixed results. The 2015 low was undercut in January of 2016.

What does this mean for investors? Tread carefully. We are entering a period of increased volatility, and extreme leverage could be dangerous.

I’ve highlighted resistance levels in the charts below. Prices would have to reclaim these levels to eliminate the bearish potential. Until then, I will remain cautious and roll forward my oil position.

-DOLLAR RATE HIKE HISTORY – The dollar topped 2-4 weeks after the previous rate hikes.

-US DOLLAR- The dollar closed below the 10-day EMA and prices look soft. However, the previous rate hikes immediately strengthened prices.

-GOLD RATE HIKE HISTORY- Gold prices rallied after the previous rate hikes. Prices bottomed the next day. However, each bottomed arrived during firmly oversold conditions (MFI and Stochastics above). Neither are oversold currently.

-GOLD RESISTANCE- Resistance box for gold.

-SILVER RATE HIKE HISTORY- 2015: Prices bottomed 2-days before the increase but promptly retested the $13.62 bottom the next day. 2016: Prices spiked lower the day after the increase before finally bottoming at $15.67.

-SILVER RESISTANCE- Resistance box for silver prices.

-GDX RATE HIKE HISTORY- 2015: Prices bottomed the day after the hike, and rallied for 13-trading days before sinking to a new low. 2016: Miners dropped the day of the hike significantly, and bottomed 4-days later.