There has been a massive chaos in the price movement of gold and silver in the past few weeks. Investors are worried about their investment as there is no clue about interest rate hike decision by the FED. The market is also making random price movement in comparison with major economic news release but failing to achieve firm stability due to FED meeting. Keeping the upcoming FOMC meeting minutes in mind the silver market has reacted sharply in the last few days. The price dropped more than 1.0% which is a very serious issue for the long traders. On the contrary, the gold price was also set off by 0.60%.The market is very vulnerable to major economic news release especially if it’s a precious metal.
Precious metal investors are in fear about the rate hike decision. Currently, they are not willing to reinvest into this risky market until they are 100% sure that the FED is not going to hike their interest rate in the September month. According to the researchers, there is only 20% chance of interest rate hike in the month of September since the US economy is doing pretty badly in the recent days. There has been a strong bounce the CME Fed watch rate rise from yesterday to till today. The index has jumped from 15% to 21 % till now at an alarming rate. So this has also created a major confusion into the mind of US dollar buyers. To be precise, there is more than 79% chance that the FED will not hike their interest rate in the upcoming FOMC meeting minutes. There has been a massive rise in the 10-year bond price. The price rose more than1.60% today crossing the high of the mid-June. This also shows that the monetary sentiment is again back in action to grip the traders.
It’s true that the bond yielding movement will strengthen the dollar but the question remains about its sustainability. Can the green buck handle the FOMC meeting minute smoothly? Even a rate hike with a dovish statement will neutralize the fact. But this will create a massive swing in the price of precious metal and create prolonged choppy price movement among the entire financial instrument. This will also weaken the Japanese Yen to a great extent. On the contrary, the euro is moving based on news in the recent days. The European Central Bank declared steady interest rate with a fixed strategy of $90 billion-per-month bad paper buyback “stimulus program” which they have been following for the last two months.
The oil industry is also shattered by the massive upcoming FOMC meeting. The current scenario helps the west Texas intermediate to settle around 4.65% higher than its previous value while the Brent North sea rose about 4.15%.This has caused the sharp fall in the oil price too. The mixed sentiment in the commodities market is more vigorous compared to the currency market. It seems like the FED has created a war in the financial industry. If the FED readjusts their interest rate just before the FOMC meeting minute then we can expect price stability in the commodities. But can the FED do this despite so many bad economic news data?
Considering the worst case scenario that is postponed of interest rate in the month of September will create further more chaos in the market. If the FED held up their decision rate in this month then the unstable situation will prevail among all commodities price till the end of this December. All the precious metal are trading at critical support and resistance level and trading it without any clear fundamental decision would be an immature act. As professional commodities traders, it is better to stay on the side until the market bears and bull fight with other. Smart investors will wait patiently for the dust to settle down so that they can walk on a smooth road.
According to the Goldman Sachs researchers, it is high time to experience volatility in the market. They expect that the price of S&P 500 will be significantly down in the upcoming days. The forecast furthermore added that the index will be lower than 1% -2% in the recent upcoming days. But the entire problem can be taken care of if the labor market reacts positively to the US economy. It seems like the market sentiment is still favoring the US dollar even though all the technical data argues against the green bucks.FED officials are overly cautious about their statement since they want to save their last resort for the upcoming FOMC meeting minutes. Investors are eagerly waiting for a small clue about the FED decision to predict the market move. Most importantly the last few speeches from the FED officials were not the hawkish as the investors expected. Rather they can be termed as a dovish statement due to the constant poor performance of the US economy. Overall the market condition is totally unstable and the traders should wait patiently before things get clear to them. Acting too early in the violent market will just result in financial loss. This situation might exist for a prolonged period of time until the FED clearly illustrates us about their next move. To be precise we must be in line with their policy in order to understand the market sentiment. Once the market sentiment is established firmly then trading environment will be the whole lot easier for the investors.