Precious Metals and Industrial Metals Frozen In Place

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metals gold silver copper bnsnla 2Investors are more or less sitting on their hands, moving to the sidelines while their attention is focused on the US Federal Reserve decision due in the late afternoon in the US session. The Fed’s Federal Open Market Committee Tuesday kicked off a two-day policy meeting on whether economic conditions are strong enough to immediately scale back the $85 billion a month quantitative easing program. Analysts disagree on the likelihood of a taper, but some expect the Fed to announce a modest reduction of about $10 billion to bond purchases. Others think that the Fed will not say anything while a small group expects the Fed to announce plans or a formula for tapering after the New Year when Janet Yellen takes the helm from Mr. Bernanke. Gold is trading at 1231.80 moving within a tight price range. Gold prices booked their worst November since 1978, as a brighter economic landscape fanned fears of reduced stimulus efforts by the Federal Reserve.  Gold prices dropped 5.5 per cent in November. The declines help put gold on track to end 2013 in negative territory, disrupting a 12-year winning streak that saw the precious metal top price records. Gold achieved that Bull Run on concerns that the Federal Reserve’s attempts to boost the US economy in the wake of the financial crisis would lead to higher inflation or a weaker dollar. In either scenario, gold is perceived as holding its value better than other investments. 

Precious metals fell on Tuesday as investors shed some bullish bets on expectations that the U.S. Federal Reserve may be poised to trim its bullion-friendly economic stimulus. SPDR Gold Trust the world’s largest gold backed exchange fund said its holding fell 0.25 to 816.82 tons on Tuesday as investors continue to pull from the markets.

On the Comex, gold for most active February expiry at the Comex fell by nearly 1.15% to $1240 per ounce, with the fall was conjugated with moderate rise volumes by 5%. This is an important aspect as ahead of the US Fed monetary policy meeting coming. Markets normally see lower participation with regards to trading.  Yesterday’s increase in volumes along with lower prices further strengthens the market’s mood which is anticipating the FED to start tapering its monthly bond buying program from the current policy itself.

Silver prices on the other side witnessed a much clearer trade session as per the global and domestic markets were concerned. Silver for most active March expiry at the Comex fell nearly 1.3% each to close at $19.85. Silver dropped as it took negative note of fall in gold along with the moderate weakness into the base metals complex. Overall there are no major cues available for the commodity other than the speculation over the US Fed monetary policy front.

Copper also followed the same cues, trading in the red this morning at 3.31 but remaining in its tight trading range. Metals on the whole have seen very little action and have remained well within defined trends paying little attention to supply and demand as they focus on the US Fed decision.

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About: FX Empire Analyst - Barry Norman

Barry produces a private Daily Market Review newsletter that is distributed around the globe to over 25,000 subscribers and recently published a book on Options Trading that is available from amazon.com

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