November 22, 2017

London (Nov 22)  Gold still stuck in a consolidation mode and we are not seeing much action from traders ahead of the FOMC minutes. The FOMC minutes have the ability to move the dollar index which impacts the gold price. The fed left investors scratching their head when it comes to the matter of another hike for this year. From the outset, it does appear that not all Fed members are on the same page for increasing the interest rate in December. Looking at the Dot Plot, it is evidently clear that there would be three more rate hikes next year. We do think that the Fed would deliver another boring minute today, however, if they are going to increase the interest rate in December, this would be their opportunity to provide clarity on this. So far, markets are looking at 97% probability that the Fed would increase the rate in December and this is priced in the gold price.

[Oil and Gold; Fundamental and Technical Analysis]


Investors have pushed the oil price to its highest level since July 2015. Traders are hoping that the upcoming crude inventory data would show a large drop in inventories and this is fuelling the rally. If the number does show a significant drawdown, the oil price would continue its ride towards the $60 mark before we see any meaningful correction.  The production cut from OPEC is clearly exhibiting the positive results which cartel was hoping for. Saudi Arabia without any doubt is leading in this space and the country also reduced it’s crude export to the lowest level since March 2011. The upcoming OPEC meeting during which the cartel may extend its production cut is keeping traders on their toes.


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