Markets tepid ahead of Fed meeting minutes

Copper and gold prices were little changed Wednesday, October 12 in the US, with investors sidelined until a clearer US monetary strategy is revealed later today.

Copper for December settlement on the Comex division of the New York Mercantile Exchange ticked up 0.15 cents or 0.1% to $2.1870 per pound. Trade has ranged from $2.1790 to $2.1920.

Comex gold for December delivery slid $1.40 or 0.1% to $1,254.50 per oz. The contract has now declined 10 out of the last 13 sessions.

Today’s release of the Federal Open Market Committee (FOMC) meeting minutes is expected to provide insight on how the policy-board will proceed for the remainder of the year, considering the relative strength of the labour market and fledgling signs of inflation.

The dollar index was recently at a stronger 97.67, reflecting the growing expectation that the Fed will lift its benchmark interest rate by 25 basis points before the end of the year.

However, with the Presidential election quickly approaching, the odds of a November rate hike are essentially zero, leaving December as the last possible meeting to resume interest rate normalisation.

“With the continuing strength of the dollar and the recent rally in oil stalling, prices look destined to stay under pressure in the short term,” Malcolm Freeman, Director at Kingdom Futures, said. “Today’s release of the FOMC minutes will – if they confirm expectations of a rate rise in December- support the dollar and put further downward momentum on metal prices in general.”

Last night, Fed Bank of Chicago president Charles Evans became the latest member of the central bank’s policy board to pave the way for a December increase, saying that policy “may well be changing soon”.

Later today, his fellow colleagues William Dudley and Esther George are scheduled to speak before the release of the meeting minutes.

Still, exchange-traded funds (ETF’s) tracked by FastMarkets are standing at 2,156 tonnes, a 2016 high and an indication that investors remain attracted to gold’s safe-haven attributes.

“We still see support in the $1,240-50 range for now, with $1,260-65 being the first resistance zone. Investors will continue to eye developments for a potential Dec FOMC rate hike as well as the race to the US presidency as key market movers in the near term,” MKS said.

In data, the German WPI was better than forecast at 0.4% while the French final CPI was as expected at -0.2%. US JOLTS job openings are also slated for release.

Turning to European markets, Germany’s DAX and France’s CAC-40 were down 0.5% and 0.4% respectively, while the dollar strengthened 0.3% to $1.10122 against the euro.

In other commodities, light sweet crude (WTI) oil futures on the Nymex fell seven cents or 0.1% to $51.17 per barrel, while the most active Comex silver contract was last trading at $17.490 per oz., down 1.9 cents.

(Editing by Tom Jennemann)