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Metals market today: Gold touches $1,673, silver rises to $19.3 ahead of Fed meeting

09:31, 21 September 2022

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In this article:
  • Palladium
    Palladium
    2145.09 USD
    -1.85 -0.090%
  • Platinum
    Platinum
    852.33 USD
    -13.38 -1.550%
  • Silver
    Silver
    18.594 USD
    -0.308 -1.630%
  • Gold
    Gold
    1644.83 USD
    -14.98 -0.900%

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Bank reserve gold bars arranged in rows
Gold inched up to $1,673 per troy ounce on Wednesday morning ahead of the US Federal Reserve September meeting – Photo: Getty

Precious metals were quite upbeat on Wednesday morning, with gold, silver, platinum and palladium all up, as investors looked forward to the US Federal Reserve September meeting scheduled for later in the day, during which a further interest rate hike is expected to be announced.

Investors are pricing in the possibility of another 75-basis point hike, the third consecutive one of this kind, at about 81% possibility, whereas the probability of a more aggressive 100 basis point hike is coming in at about 19%. The US Fed has gone on record to highlight that it will take any and all measures necessary to combat soaring inflation.

Gold inched up 0.6% to $1,673 per troy ounce, pulling itself up from the near 2 and a half year lows seen recently, however, still had a weekly fall of about 1.8%.

Gold still lingers near two years and half lows

Analyst views on precious metals

According to Piero Cingari, analyst at Capital.com, “All eyes are on today’s FOMC meeting. The market is leaning towards a 75 basis point hike, even though Fed futures are pricing in a marginal probability of a full percentage point hike. I believe the FED will opt for a 75bps hike in the end, but communication will continue to be oriented towards a very hawkish stance, given how inflation surprised in August due to increases in non-energy components.

The new dot-plot on the rate path and projections for inflation, unemployment and economic growth will be interesting to watch. Metals commodities, in my opinion, have already discounted the 75 basis point increase, though the announcement can always cause some volatility in the initial market reactions.After a sharp drop last week, gold continues to trade around its lows from August 21.

However, if the Fed projects significantly lower economic growth while keeping the inflation outlook sticky and well above target, this could represent a paradigm shift for the gold’s trend.”

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Metals price performance

Silver edged up 0.4% to $19.3 per troy ounce, following gold’s example, but still also had a fall of about 1.8%, still pressurised by the US Federal Reserve potentially raising interest rates again.

Platinum inched up 0.7% to $928 per troy ounce, bolstered by a number of Chinese companies receiving permission to set up a PGM metals park in Zimbabwe, which is the third largest producer of platinum worldwide. Palladium also advanced 0.5% to $2,179 per troy ounce.

Copper dropped 0.4% to $3.5 per pound, pressurised by Fitch Ratings recently revising its copper forecast for the near term, citing global economic slowdown. Iron ore increased from CNY 697 per tonne in the previous session to CNY 699 per tonne in the current session. Aluminium inched down 1.1% to $2,253 per tonne.

The US dollar (DXY) rose from 110.2 in the last session to 110.8 in the current session.

The US 10-year Treasury yields dropped from 3.6% in the last trading session to 3.5% on Wednesday.

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Top mining ETFs and mining stocks

The VanEck Junior Gold Miners’ ETF (GDXJ) fell about 5.8% this last week

The Van Eck Gold Miners ETF (GDX) dropped 2.7% to $23.6, with a weekly decrease of about 4.6%.

The Van Eck Junior Gold Miners ETF (GDXJ) fell 3.1% to $29.1, with a weekly fall of about 5.8%.

The S&P Global Metals and Mining ETF (XME) fell 2.3% to $45.6, with a weekly decline of about 5.6%.

Glencore (GLEN) climbed up 2.3% to GBP 4.8, with a weekly loss of about 1.7%.

Rio Tinto (RIOgb) fell about 3.4% to about AUD 91.4, with a weekly decline of about 4.5%.

Anglo American (AALI) has dipped 0.9% to GBP 27.9, with a fall of about 4.6% over the last week.

Antofagasta (ANTO) dropped 3.9% to GBP 10.9, with a dip of about 9.6% over the last week.

Today’s market moving events

Investors are looking forward to the US Federal Reserve’s September meeting due to be held later in the day, during which the central bank is expected to almost certainly raise interest rates by another 75 basis points, with a marginal probability of a 100 basis points hike.

 

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