Precious Metals Continue to Move in Range Ahead of FOMC Update

Investors are waiting for cues from the Fed and the Fed is expected to stay the course today, however, there is a chance for change in forwarding guidance as some believe that the fed could mention that the ongoing trade war between China and Canada could impact growth. The Fed will end its policy meeting later today at which it is expected to raise interest rates for the eighth time since late 2015. Investors are also counting on another rate hike before year-end, though the outlook for 2019 is less clear.

Fed may incite recent softness in housing and auto sales, as well as a rather mixed “Beige Book” survey out last week that could conceivably justify moderation in its rate outlook.

FOMC Statement Likely to Serve As Main Driver of Precious Metals in Immediate Future

Analysts expect that the dollar will weaken post statement in view of the fact that it has been progressively selling off ahead of the Fed meeting which signals that investors are likely discounting relatively dovish wording. Spot Gold XAUUSD is currently trading at $1199.45 an ounce down by 0.14% on the day while US Gold Futures GCcv1 is trading at $1204 an ounce down by 0.09% on the day.

A strong dollar makes dollar-priced gold costlier for non-U.S. investors and rising U.S. interest rates typically deter investors from buying a non-yielding asset such as gold and silver which has resulted in muted momentum surrounding precious metals. Spot Silver XAGUSD is trading at $14.479 an ounce up 0.13% on the day.

Brent oil edged further away from a four-year high on Wednesday and U.S. crude fell after the U.S. said it would ensure crude markets are well supplied before sanctions are re-imposed on Iran as President Donald Trump criticized high prices. Crude oil futures were lower during mid-morning trade in Asia on Wednesday amid mild profit-taking post gains seen in crude prices over the past two trading sessions, while market participants waited for fresh cues from the US inventory data.

A build in US crude stocks reported by the American Petroleum Institute also weighed on prices. Crude prices have gained more than $3/b over the last two trading sessions amid the back of growing market supply concerns. The more definitive numbers on last week’s US inventory levels are due for release from the US Energy Information Administration later today. Meanwhile, Spot crude WTIUSD is trading at $72.39/b up 0.06% on the day.