Gold and crude oil prices rose on Monday as investors waited for the outcome of the US Federal Reserve’s policy meeting later this week.
Oil prices traded flat for most of the day, but rose at the time of writing due to continued geopolitical tensions in Ukraine.
Silver prices fell slightly, but remained just shy of the $43-per-ounce level on Monday.
Gold rises
Gold prices were in the green amid expectations of interest rate cut by the US Fed later this week.
Investors avoided placing large bets ahead of the meeting.
“The price action reflects a lack of conviction, as investors hold back from making bold bets ahead of a pivotal week packed with central bank monetary policy decisions,” Vishal Chaturvedi, editor at FXstreet, said in a report.
The market has priced in a probability of 25 basis point rate cut this week with a slight possibility of an even 50 bps cut.
Chaturvedi added:
Alongside the Fed, monetary policy decisions from the Bank of England (BoE), Bank of Japan (BoJ), and Bank of Canada (BoC) add to the event-heavy backdrop, potentially amplifying market volatility across asset classes, including gold.
Gold remains strong, nearing record highs and poised for further gains.
This is primarily due to a positive market sentiment, driven by lower US Treasury yields, a weaker dollar, and ongoing geopolitical tensions, all of which fuel demand for safe-haven assets, according to Chaturvedi.
At the time of writing, the COMEX gold contract was trading at $3,692 per ounce, 0.2% from the previous close.
Oil prices gain
Oil prices were higher as geopolitical tensions simmered after Ukrainian drone attacks on Russian refineries.
Oil prices continue to fluctuate within the $65-70 range.
This stability is supported by potential supply disruptions stemming from Ukrainian assaults on Russian energy infrastructure, as well as renewed demands from Trump for stricter secondary sanctions on purchasers of Russian crude, according to Saxo Bank analyst Ole Hansen.
On Sunday, Russian officials reported that Ukraine launched a massive overnight drone attack, deploying at least 361 drones against Russia. The assault caused a brief fire at the extensive Kirishi oil refinery in Russia’s northwest.
The Primorsk facility is capable of loading approximately 1 million barrels of crude oil daily.
In contrast, the Kirishi refinery processes around 355,000 barrels of Russian crude per day, which constitutes 6.4% of Russia’s total crude processing capacity.
Meanwhile, on Saturday, US President Trump stated that the US is ready to impose new energy sanctions on Russia.
However, these sanctions are contingent upon all NATO nations stopping their purchase of Russian oil and implementing similar measures, thus increasing pressure on Russia.
Last week, both crude contracts saw gains of over 1% as Ukraine increased its attacks on Russian oil infrastructure.
These attacks included Primorsk, Russia’s largest oil exporting terminal.
Solid refinery demand in China and a decrease in US crude inventories provided some support for oil prices.
However, weaker economic data from China, as noted by UBS analyst Giovanni Staunovo, exerted downward pressure on prices.
The West Texas Intermediate crude oil was at $63.40 per barrel, up 1.1%, while Brent was 0.9% higher at $67.58 a barrel.
Silver prices fall
Silver prices fell on Monday after sharp increases last week.
Investors booked profits after prices hit 14-year highs, and remained in the same range on Monday.
“The technical analysis of the daily chart suggests the price of the precious metal moves upwards within an ascending channel pattern, indicating that market bias is bullish,” FXstreet said in a report.
The 14-day Relative Strength Index (RSI) is positioned slightly above the 70 level, suggesting that the Silver price is trading within overbought territory and a potential for a downward correction.
However, the persistent strong uptrend indicates buyers remain firmly in control.
At the time of writing, the silver contract on COMEX was at $42.750 per ounce, down 0.2% from the previous close.
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