Precious Metals Trapped in Short Price Band As Investors Focus on Central Bank Rate Decisions

Precious metals are currently trapped in a short price band with resistance and support from high and low price handles of last 10 trading sessions as risk appetite increased among investors with US inflation data and US Fed & ECB rate decision in focus.
Colin First

Gold (XAUUSD) prices were little changed on Wednesday’s early Asian market hours after falling to one-week lows the session before and is currently trading around $1295.32. The yellow metal is highly sensitive to U.S. interest rates which lift the opportunity cost of holding non-yielding bullion and boost the dollar in which it is priced. The rate hike is almost a done deal, it is quite clear that US Fed will most likely increase rates by another 25 basis points, but the market watchers are looking very closely on the language rather than the rate hike. People will be looking very closely to see if there’s any forward guidance that will indicate if there will be a fourth rate hike into the year-end.

Gold Prices Chop Around

Continued positive macro data in US market also shows signs that the dollar-denominated gold will continue to see the further bearish influence in the long term as greenback continues to grow strong. Silver saw similar muted tone in Tuesday and early Wednesday’s trading session as US dollar continues to grow strong ahead of central bank rate decisions in two most active economies of the world. After falling from 7-day high the white metal has managed to hold the fort at $16.80/$16.89 price handle and is expected to move within a wider band of $16.93 to $16.90 across the week as US greenback will be the main focus of traders in a week full of volatile & news filled market hours.

Gold Hourly

Crude Oil market saw sanctions on two major producers of OPEC Cartel Iran & Venezuela and this caused OPEC to discuss the possibility of increased production output from Cartel to compensate for global demand in an unofficial meet. While the OPEC official summit for final decision of future production limit has yet to come, Crude Oil production records already show increase in activity in Saudi Arabia & Russia for month of May’18 with Saudi’s output spiking over 100000BPD & Russia’s output spiking 143000BPD resulting in many analysts predicting high possibility of Official summit confirming decision to increase Crude Output. Meanwhile, US Crude Oil saw fall in value over dovish API weekly crude stock data released late in the North American session. WTIUSD is currently trading around $65.97 as investors continue to look forward to official meet of OPEC members later this month.

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