Gold Prices Likely to Range Leading Up To FOMC

Gold prices continued to consolidate within a tight range during the course of the day yesterday as the markets await the FOMC today. The traders and the investors do not want to commit themselves too much on either side, so close to such an important meeting and that is why we see a kind of stalemate between the buyers and the sellers over the past 24 hours. We did see an effort to run to the downside and to the upside but those were just fakeouts and the prices could not push past their ranges for the day. The Fed announcement and statement would be a key point today as the Fed is expected to hike rates. The market has already almost fully priced in a rate hike for the month and they just await the confirmation for today.

FOMC Holds the Key

That confirmation is likely to come in today and hence the bigger focus would be on the statement following the announcement as the market would look for clues on when the next hike would be. The traders were expecting the next rate hike to be in September but with the recent employment data from the US being not so very good, the chances for a rate hike then is quite slim and that will be the one that will be watched out for today. If the Fed is hawkish, then we are likely to see the gold prices correct further and then 1248 and 1220 would come into the picture. Else, we should see the gold prices shoot back up towards the 1298 region after the announcement.

Oil prices continued to remain steady as the issues in the Middle East seem to have been contained well for now and so far, there has not been any effect of that on production or inventory data. The prices trade just above $46 for now but with the oil inventory data from the US out later in the day, we should be in for some real volatility. If traders can remember, the inventory data that came in last week showed a build up in the inventory and the oil prices had plunged as a result of that. The oil bulls would be hoping for a draw in the inventory so that they can hold out some hopes for the prices to steady.

Silver prices also traded within a tight range for most of the day yesterday as the markets and the traders waited for the FOMC later today. The $17 region is likely to witness a lot of selling and hence the traders would be wary and would rather wait for the announcement before committing themselves in any specific direction.