Precious Metals Trade Dovish Ahead of US Fed Rate Decision

Gold held steady on Tuesday as investors were cautious ahead of a U.S. Federal Reserve meeting, which could offer direction on future interest rate hikes, while markets kept a close eye on developments on the Sino-U.S. trade front. Gold is glued to the $1,200 see-saw levels with some short positions closing just in case the Fed does something unexpected like give some notion of a pause in the 2019 rate hike cycle.

Investors await details from the two-day Fed meeting beginning later in the day when the U.S. central bank is expected to raise benchmark interest rates and shed light on the path for future rate hikes. Spot Gold XAUUSD is currently trading near flat at $1199.19 an ounce up 0.03% the day, while US Gold Futures GCcv1 is trading at $1203.10 an ounce down 0.10% on the day.

Crude Oil Bullish With Price Reaching 4 Year Highs

Higher U.S. interest rates typically pressure precious metals, since it costs to store and ensure the metals, but does not pay interest. Gold has fallen more than 12 percent since hitting a peak in April against a backdrop of trade disputes and as rising U.S. interest rates diminish demand for non-interest bearing bullion. Months-long trade rift between Washington and Beijing drove investors to buy dollar instead of gold as investors continue to believe that Washington has less to lose from the dispute. If lingering trade war fears or renewed emerging market jitters sour sentiment, U.S. dollar may reclaim a haven bid causing precious metals to decline further. Spot Silver XAGUSD is currently trading at $14.26 an ounce up 0.01% on the day.

Oil prices on Tuesday were within reach of four-year highs hit in the previous session, as looming U.S. sanctions against Iran and unwillingness by the Organization of the Petroleum Exporting Countries (OPEC) to raise output supported the market. The United States from Nov. 4 will target Iran’s oil exports with sanctions, and Washington is putting pressure on governments and companies around the world to fall in line and cut purchases from Tehran.

Iran will lose sizable export volumes, and given OPEC+ reluctance to raise output, the market is ill-equipped to fill the supply gap which results in an increase in Crude Oil price across the globe. Analysts believe that current rally in crude oil is supported fundamentally. Spot Crude WTIUSD is currently trading at $72.81/b up 0.33% on the day while Brent Crude futures were at $81.95/b up 0.92% on the day.