September 12, 2016 -- Gold and silver prices dropped sharply Friday because of rhetoric from Federal Reserve officials about a supposedly strong case for interest rate hikes.

But America's central bank made little comment regarding the recent disappointments on jobs, manufacturing, services and GDP. It may be that Fed officials are resting their “strong case” primarily on strong stock prices. However equity markets ALSO got hit on Friday with the Dow losing nearly 400 points -- the largest drop since Brexit roiled the markets.

The bulk of July and August were characterized by light volume trading and extraordinarily low volatility in most markets.

The performance of stock markets may become the best indicator with regard to interest rate policy between now and next week's Fed meeting. Heavy selling coupled with weak economic data have acted as a powerful deterrent so far. If the Dow loses several hundred more points in the coming days, we may see the Fed back away from saying there is a “strong case” for higher interest rates.

Live prices at MoneyMetals.com show gold currently trading at $1,325.60 per ounce on the global market, and silver is coming in at $18.90.