Written Commentary
GOLD
December gold futures are higher and are close to record highs. Much of the recent strength is linked to increasing prospects that the Federal Open Market Committee will lower its fed funds rate at the conclusion of today’s policy meeting by 50 basis points.
Currently there is a 61% probability that the Federal Open Market Committee will lower its funds rate by 50 basis points today, and there is a 39% probability that the FOMC will reduce its key interest rate by 25 basis points. The FOMC will release a statement after its policy meeting at 1:00 central time, and Federal Reserve Chair Powell will hold a press conference at 1:30.
Recent weakness in the U.S. dollar has contributed to gains in precious metals. Additional supportive influences on gold are its safe-haven appeal and aggressive buying by central banks.
SILVER
December silver futures are slightly lower today, retreating from Monday’s high, as traders turn cautious ahead of a highly-anticipated monetary policy statement from the Federal Open Market Committee. Price gains are being limited by disappointing economic data from a large silver consuming country in Asia.
COPPER
December copper futures are higher with much of the support linked to prospects of easier credit conditions from the Federal Reserve. On Monday December copper futures advanced to their highest level since August 27 and were able to trade above the $4.30 per pound level.
Prospects of a potentially more aggressive Federal Reserve pivot to accommodation pressured the U.S. dollar, providing an additional boost to dollar-denominated commodities, such as copper.
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