The US Federal Reserve on expected lines raised key interest rates by 25 basis points to between 0.50 per cent and 0.75 per cent on Wednesday,

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FED RATE: The US Federal Reserve on expected lines raised key interest rates by 25 basis points to between 0.50 per cent and 0.75 per cent on Wednesday, its second such hike since last December.

The Fed policy is slightly hawkish as indicated by three rate increases expected in 2017 compared with two rate increases expected in September’s statement,” Ajay Bodke, CEO & Chief Portfolio Manager – PMS, Prabhudas Lilladher told ETMarkets.com.

BASE METALS; Base metal prices are expected to diverge on Thursday after US’s rate hike decision,
“The dollar surged as the highly-anticipated rate hike by US’s Federal Reserve came true, and Shanghai prices will feel pressures from a strong dollar to move divergently on Thursday,” SMM says.

CRUDE OIL: Early Monday, the price of oil jumped more than 5% after the deal between OPEC and non-OPEC countries was announced by Saudi Oil Minister Khalid al-Falih. OPEC agreed to reduce oil production by 1.2 million bbl/day starting in January.

– Saudi Arabia will cut production by more than 500,000 bbl/day.
– Saudi Arabia agreed on November 30 to cut its production to 10.06 million bbl/day.
Analysts think the oil cut deal could bring US shale back from the brink
– With 1.758 million bbl expected to be slashed out of the market, oil prices have more room to rally with Brent potentially closing above USD 60 in the next couple of weeks.
– US rig counts rose by 21 last week to 498.
Expected Jan month-on-month gain in US shale oil output first since Apr 2015
– US shale oil production should rise overall by 2,000 bbl/day to 4.542 million bbl/day in January.
Deepest Oil Cuts in World’s Top Market Didn’t Need OPEC Deal
– Malaysia and Brunei are doing their bit for the global pact to rebalance oil markets.
– China, the world’s fifth-biggest producer last year, has reduced output by about 300,000 bbl/day this year.

GOLD:
India’s gold demand : but for full-year 2016 is on pace to be the weakest in seven years, said analysts at Commerzbank.

According to Commerzbank, no positive impetus for gold demand can be expected from India in the near future after the Indian government declared most of the country’s cash to be no longer legal tender in early November. This was one reason why India imported large quantities of gold again last month.Chinese Gold demand: Chinese gold demand may well pick up in 2017, said Swiss bank UBS in a snippet.

After a recent trip to the country, analysts at UBS described sentiment there toward gold as relatively neutral to tentatively positive.

Many market participants expect gold to climb next year but are cautious about getting involved yet ahead of a U.S. Federal Reserve policy meeting this week, year-end and uncertain outlook of the Chinese yuan.

“Looking ahead, macro uncertainty and currency volatility in China, against a backdrop of relatively limited investment alternatives, could encourage local market participants to turn to gold,” analysts added.

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