Home Markets Markets to remain cautious ahead of the US FED policy meet

Markets to remain cautious ahead of the US FED policy meet

by Prathamesh Mallya (AVP- Research, Non-Agri Commodities and Currencies, Angel Broking Ltd)
Sep 21, 2021
Markets to remain cautious ahead of the US FED policy meet, Market, KonexioNetwork.com


On Monday, Spot Gold ended higher by 0.55 percent reversing some of the losses from last week ahead of the US Federal Reserve policy meet.

Also, renewed restrictions across nations following the wide spread of the pandemic and slowdown in China limited the fall in the safe haven asset Gold.

The gains for Gold were limited as the property developer Evergrande's solvency worries increased appeal for the safe haven Dollar which pressured the Dollar priced commodities.

Gold prices remained under pressure last week as better than expected US economic data before the Federal Open Market Committee meet scheduled on 21st & 22nd September 2021 increased bets towards a hawkish approach by the US Central bank.


Uncertainties over the US central banks stance in the months ahead is expected to keep the market cautious and Gold prices steady. Any Hawkish comments by the US FED chair Jerome Powell in the two-day meet which begins today will weigh on Gold prices.


Crude Oil

On Monday, WTI Crude slipped over 2.3 percent to close at $70.3 per barrel. Oil reversed most of the gains from last week following a stronger US Dollar.

Also, the Chinese property developer Evergrande's solvency issues sent a panic wave across markets which turned investors cautious and added to the fall in Oil prices.

The fall in Oil prices was limited after reports suggested that some of the Oil producing units in the Gulf of Mexico are expected to remain offline until the end of this year due to damage from Hurricane Ida.

Slow resumption of the production capacities in the U.S. Gulf of Mexico following two hurricanes and bets over increasing global demand underpinned Oil prices last week.


Markets are expected to remain cautious ahead of the US Federal Reserve policy meet which begins today for cues on their monetary stance in the months ahead.


Base Metals

On Monday, Industrial metals on the LME & MCX plunged after worries over possible debt default by China property developer Evergrande Group triggered a selloff in the financial markets.

The Evergrande crisis shifted investors towards the safe haven Dollar which dented appeal for the Dollar priced industrial metals.

Nickel found some support towards the end of last week as government officials from Indonesia, major Nickel producing nation, stated that they might impose taxes on export of Nickel. However, prices eased in yesterday’s session following reduced bets of Indonesia imposing export taxes on products with less than 70% nickel content in order to support the country's domestic processing industry.


On Monday, LME Copper slipped over 3 percent to close at $9033 per tonne as prospects of default by Chinese property developer amid slow expansion in China’s factory activity pressured Copper and other industrial metals.

Stronger US Dollar amid Evergrande Crisis might outpace worries of potential Shortage in the global markets and push prices lower.