Forecast about metals and stocks before FOMC: A Brief overview about commodities.


The recent indecision in the market has affected the gold market in a severe way. Professionally trained traders are overly cautious about the current situation of the struggling US economy. According to the last FOMC meeting minutes, there has been a slight indication that the FED might hike their interest rate in the month of December if the economy progress in the interim period. Last Friday gold prices fall sharply erasing all the gains after the release of the U.S. employment data. There has been a sharp fall in the gold price, near about $1.10 or 0.09% which ultimately settle the price at $1251.90 per ounce.

In the earlier trading session, there has been a slumped in the contract to $1243.20, which was not seen until June 7 after hitting the high at$1267.60.This huge volatile movement was caused by the extreme poor U.S. nonfarm payroll data. Last week the U.S economy successful added 156,000 jobs in their labor market which was significantly down from the month of August. Negative data in the current job lot opening ticked the unemployment rate to 5.0% .According to the Labor Department, the market had an expectation of 176,000 new jobs with a hold of jobless rate data to 4.9%.The average hourly wages also rose to 2.6% in the month of September which full filled the compliance of consumers expectations. Though there is has been mixed news releases of the U.S. economy, researchers suggest that there is still 65% chance of interest rate hike in the December FOMC meeting minutes. This has created a sign of relief into the mind of investors that the upcoming FOMC meeting minutes in this week has very little to offer.

The worst performance of metal till September 2013 has been market by the sharp drop in the last week which yields 4.9% or $64.40 in the loss. Though there has been a strong expectation for a rate hike by the FED in the month of December yet the upward rally in the precious metal price has been dominated by the bearish momentum.

The US dollar index was down by 0.1% and ended at week’s low at 96.65 reflecting the massive weakness in green bucks at the current stage. However, the index managed to climb to two months highs which exceed the significant high of 97.21 upon the release of U.S. jobs reports. The consumer sentiment of the US customers changed into bullish mode followed by the hint of the possibility of interest rate hike decision in the month of December 2016.A stronger U.S. dollar results in the rise in the price of metals whereas weakening of the green bucks causes sharp fall in precious metal prices leading a massive increase in the price value of other commodities.

The price of silver also shot up by 3.5% or 0.2% on Friday to settle at $17.38 a troy ounce. Initially, there has been a fall in the contract by $17.11 earlier on Friday, the lowest price since June 24.There has been a sharp fall in the price of silver by 9.55% and ended p at $2.163 a pound. The price of copper also dropped by 3.1 cents or 2.09%.

The most important event for the upcoming week is the FOMC meeting minutes on Wednesday since investors are looking for a fresh indication of the interest’s rate hike decision in the upcoming FOMC meeting minutes. The news releases of the U.S. retail sales data is also going to play a major role in the market since investors and commodity traders are strongly spotlighting this even as a strong ingredient of long-term commodity and precious metal price driving catalyst. To be precise this will help the investors to gauge the strength of world largest economy against its major rivals.

The US dollar has gained some strength in the market as the FED speakers gave a hawkish statement last week indicating that the rate hike is most likely to be done at the end of these years. Last week PMI report suggests that the U.S economy is slowly trying to recover its loss which resulted in the sudden drop in oil price. The possibility of a rate hike in the month of December has created a mass chaos into the mind of investors and caused a drop 0.2% in futures. On the contrary, the ECB tapering has been sluggish in the recent days which have mitigated the strength of EURO to a certain extent. The last week ECB minutes failed to create a strong bullish move in the European market and held down the European indices along with the FTSE, DAX, and CAC for about 0.3%.Amidst of the massive chaos in the financial market, there has been a sharp rise in the price in the stock market however equities were significantly cheap relative to the government and corporate bonds. The recent election in the U.S has added furthermore confusion into the stock market and investors are seriously thinking about further investment in the green bucks before the FED clearly dictates about their rate hike decision. Economist is suggesting that there will be a steady move in the stock and precious metal price in the upcoming week but increased volatility will be created during the event of FOMC meeting minutes. So, cautious traders are well aware of this fact and not reinvesting anymore on the mighty green buck before the dust settles in the market.