It’s more of a crude oil story than gold and silver as its edged past the $78 mark yesterday. Crude oil rose after a pipeline leak forced British Petroleum to shutdown the giant Prudhoe Bay oilfield in Alaska. Prudhoe Bay, the largest oilfield in North America, produces 400,000 barrels of crude a day, equivalent to 8 per cent of US domestic production. BP was unable to estimate when output would be fully restored. Crude oil prices were Prices were further buoyed by a warning from Iran that it was prepared to employ a ban on crude exports if the UN Security Council imposed sanctions in response to its nuclear enrichment programme. Gold and silver are consolidating at the moment but are finding sellers at higher levels ahead of the Fed of meeting. The US dollar has gained on uncertainty overt the Fed interest rates.
Higher crude oil should force the Fed to raise interest rates today. If there is another shock like a brewing Hurricane on top of this, crude oil prices could easily hit $84 a barrel.This risk could be a good enough reason for the inflation-fearing Federal Reserve to raise interest rates one more time.After today’s meeting the Fed is bound to drop the curtain on their 2 year long tightening campaign, but when they do so hinges on oil. This is not just for the Fed but for most of global central banks.
Copper prices could jump sharply if strikes by workers in Escondidamine continue into next week. A prolonged stoppage in Escondida resulted in copper production falling by about 60% yesterday as more than half of the workers went on strike over pay. BHP Billiton said supply commitments were being met for the moment but declined to comment on when its stockpile would run out. It is unlikely to last long. Escondida produces around 3,300 tonnes a day, so it won't take a long time to eat into the reserves.
Silver fell yesterday after it was unable to break key technical levels. Gold was firm and outperformed silver. The Fed meeting will result in profit taking today both in gold and silver. Any sharp decline should be used as an opportunity to go long, especially in gold. Silver will be more volatile as it needs to hold $1192 on closing basis to prevent further losses. The Israel, Lebanon and Hezbollah crisis and other geopolitical risk have taken a back seat but could move into the driver’s seat anytime.
GOLD
Gold needs to hold $657.00 on closing basis to prevent further losses to $644.00 and $632.00. On the higher side a only consolidated break of $670.00 will result further gains to $681.40 and $692.00.
SILVER
Silver needs to hold $1192.00 on closing basis to prevent further losses to $1162.00 and $1138.00. On the higher side $1256 is the initial resistance with $1302 as the key short term resistance.
Happy Profitable Trading
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