Fed Decision Sends Metals Market into Tense Wait
The metals market is at a crossroads as macroeconomic factors take center stage over supply-and-demand dynamics. Investors are awaiting the US Federal Reserve's decision on interest rates, with a 25-basis-point rate hike already priced in.
Gold and silver have received short-term support from cautious buying ahead of the Fed meeting, but their recovery is dependent on the regulator's tone. If the Fed signals a softer approach to further steps, gold and silver could continue to recover. However, if the US central bank indicates readiness for another series of rate increases, pressure on precious metals could return quickly.
The situation for gold is particularly delicate, with geopolitical risks and doubts about the sustainability of the global economy supporting interest in safe-haven assets. However, higher interest rates and yields make assets without intrinsic income less attractive, which is why gold is not receiving its usual strong support from tensions in the Middle East.
In the industrial metals segment, copper remains a key story, with the price holding at around $6.4 per pound below recent peaks but still at a very high level. Zinc is another interesting metal, with prices near multi-year highs due to a shortage of readily available metal and low LME inventories.