Gold prices fell on Tuesday as the U.S. Dollar recovered from early losses and investors remained cautious ahead of Wednesday’s U.S. Federal Reserve interest rate decision and monetary policy statement
Traders Showing Some Risk-Aversion Demand – Gold prices fell on Tuesday as the U.S. Dollar recovered from early losses and investors remained cautious ahead of Wednesday’s U.S. Federal Reserve interest rate decision and monetary policy statement. Traders were also worried about President Trump’s announcement of the new Fed chair which he is expected to make on Thursday. Traders are also concerned about Friday’s U.S. Non-Farm Payrolls report. Strong economic also data supported the Fed’s notion to raise interest rates in December, weighing on prices. Gold prices are trading higher early Wednesday as traders reacted to the terrorist attack in New York City on Tuesday and ahead of the U.S. Federal Reserve’s monetary policy statement. The terrorist attack, wherein a man driving a rented pickup truck mowed down pedestrians and cyclists killing eight people, prompted some risk-aversion demand. The Fed is scheduled to release its statement following its meeting at 1800 GMT. A rate hike in December is largely priced into the markets. However, investors will be looking for hints on the Fed’s stance on monetary policy: in particular, the inflation outlook and how the Federal Reserve wishes to respond. Stated another way, investors want to know if the central bank is likely to adopt a “wait and see” mode or try to get ahead of the curve. In other news, traders will get the opportunity to react to the latest ADP Non-Farm Employment Change report and ISM Manufacturing PMI.
Crude Rises after API Reports Bigger-Than-Expected Draw – U.S. West Texas Intermediate and international-benchmark crude oil prices rose slightly on Tuesday as investors continued to remain optimistic that the OPEC-led strategy to cut production, trim the global supply and stabilize prices would be extended beyond the March 2018 deadline to the end of the year. Dampening the bullish sentiment however were concerns over increasing U.S. exports and rising exports from Iraq. End-of-the-month position-squaring also limited the upside price action. Oil prices are being supported early Wednesday by overnight strength in Asia. The buying is being driven by a report from the American Petroleum Institute (API) that showed a bigger-than-expected decline in U.S. crude and gasoline inventories last week.
NATURAL GAS- The natural gas markets initially tried to rally during the day on Tuesday, testing the $3.00 level. That’s an area that should continue to offer significant resistance, and by falling off the cliff, the market has now filled the gap that had formed several days ago. I think that it is likely we will continue to see volatility in this market, and I still believe in selling rallies. However, at this point the market has fallen far enough that I don’t have any interest in trying to short it from here. I suspect that it’s probably best to wait for the market to rally again and reach towards the $3.00 level to start selling. An exhaustive candle is exactly what I want to see after a rally, although short-term traders may be jumping in to take advantage of what should be support. Warmer than anticipated temperatures in the short term in America should continue to put bearish pressure on the natural gas markets as demand shrinks.
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