Precious Metals News Update - 9 November 2018

PRECIOUS METALS RANGES: Trade Date - November 8th

COMMENTS / HIGHLIGHTS:

• With the US mid-term elections done and dusted, investor focus returned to the latest MonPol announcement from the US Federal Reserve’s FOMC on Thursday.

• Prior to that however, the precious metals had adopted a softer tone after Initial Weekly U.S. Jobless claims fell by 1K to 214K (seasonally adjusted).

• When the FOMC released its latest statement leaving interest rates unchanged (as expected), market reaction was muted and attention turned to the tone of the statement.

• ‘Hawkishness’ permeated the Fed Statement with the central bank committee noting that “The Committee expects that further gradual increases in the target range for the federal funds rate will be consistent with sustained expansion of economic activity, strong labor market conditions, and inflation near the Committee’s symmetric 2 percent objective over the medium term,”,  “Risks to the economic outlook appear roughly balanced.” In other words, "further gradual rate increases ahead." =  a December rate hike is almost a certainty. The Greenback’s recent ‘bid’ tone was consequently further bolstered, keeping precious metals values on the backfoot for the present.

• The other highlight has been the recent sharp slide in crude oil values. Energy market analysis isn’t part of my remit, so I’ll take the opportunity to purloin from Commerzbank’s ‘Commodities Daily’ yesterday for an excellent précis of recent events: “: In view of the latest price slump and the oversupply that looks set to materialise next year, OPEC is thinking about cutting back oil production. A Financial Times report illustrates how pressing this issue is: allegedly, Russia plans to step its oil production up by an additional 300,000 barrels per day early next year unless a deal is struck with Saudi Arabia to restrain output. Since the summer, OPEC and Russia had expanded their oil production by more than 1 million barrels per day to offset the shortfall in Iranian oil exports. This is now turning out to be far smaller than expected. What is more, US output is rising more quickly than anticipated. According to the US Department of Energy, it is already at 11.6 million barrels per day. Consequently, last week once again saw a steep 5.8 million barrel increase in crude oil stocks.”

Kind regards,
Andre