Crude Oil May Rise as Markets Steady After FOMC Minutes
CHICAGO (Aug 22) Commodity prices are on the upswing in European trade. Risk aversion noted in US and Asian hours in the wake of July's FOMC minutes seems to have receded, with markets likely settling on the idea that the release merely confirmed a status quo that was already well-known (i.e. that the Fed will taper in small size - perhaps about $10 billion - at the September meeting). Broadly supportive PMI readings from the Eurozone and China are likewise helping to underpin sentiment.
From here, the spotlight will shift to the Fed's Jackson Hole Economic Summit. The four-day symposium features an appearance from Janet Yellen, currently the Fed’s Vice Chair and one of the leading candidates to replace Ben Bernanke when his tenure ends in January 2014. If Yellen is indeed chosen to take the reins next year, it will be up to her to manage the Fed’s move toward monetary policy normalization. With that in mind, traders will be keen to hear what she has to say on the matter of QE reduction.
S&P500 futures are pointing cautiously higher ahead of the opening bell in North America, hinting at a risk-on mood as Wall Street comes online. That points the way higher for cycle-linked crude oil and copper prices. If a more sober re-evaluation of yesterday’s FOMC minutes release is indeed the primary driver now underpinning risk trends, gold and silver ought to advance as well. With that said, markets remain very headline-sensitive, leaving assets vulnerable to sudden changes in sentiment.
Spot silver added 32 cents to $$23.12, while gold jumped $15.84 to $1375.97/oz.