BULLION – Gold could continue to trade higher after the long expected Fed policy statement that was released yesterday. In line with expectation the Fed held rates unchanged and decided to keep doors open for rate cut in the near future. One interesting fact was that the all-time favorite word patient was somewhere missing in the statements; Fed sees a lot of uncertainties in the market. Also to add to dovish comments, Fed lowered its inflation expectations for 2019, and showed concerns about the recent economic numbers too. On other hand, ECB governor surprised wherein he showed concerns about economic growth and paved a path for a rate cut in near future. Also BOJ has decided not to make any changes and hold its rates unchanged. BOE will be releasing its policy statement and expectation is that central bank could hold rates unchanged and a dovish stance could further support gold prices. All these factors are very positive for metal.
ENERGY- Oil gained after data from EIA showed a surprise drawdown after two weeks of crude inventories build and fell by 3.1 Mbpd, compared with expectations for draw of 1.1 Mbpd. Refined products also posted surprise drawdowns due to a rise in refining and crude exports, as well as a drop in crude production. EIA data also showed that gasoline inventories were down 1.7 mln barrels, while distillate stockpiles edged lower by 600,000 bpd last week against expectations for supply increases of 1 Mbpd each for gasoline and distillates. U.S. crude oil imports averaged 7.6 Mb/d last week, down by about 316,000 b/d from the previous week, while crude oil exports averaged about 3.1 mln b/d, down by about 176,000 b/d from previous week. A rocket attack on a site in southern Iraq used by foreign oil companies, including U.S. energy giant ExxonMobil, threatened to further escalate U.S.-Iran tensions in region.
BASE METAL – Base metals traded firm for the last couple of session and are like to trade higher on back of move in other asset classes and slide in DXY. Copper prices rises along with most other base metals as the U.S. dollar slipped on signals that the Fed was ready to lower interest rates to combat growing risks. Fed on Wednesday left interest rates unchanged as widely expected, but said the case for lower rates was building, suggesting it could ease monetary policy as early as next month amid rising trade tensions and concerns about weak inflation. Additionally one more support for the metal is that, US-China trade talks which were hanging in the air are set to resume later in this month. Strike concerns for copper could be abated as Codelco miners are likely to consider acceptance of new proposal sent to them. We continue to maintain appositive bias in copper and nickel, which aluminum is likely to under perform.
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