Gold prices fell below the psychologically important $1,300 level as the Federal Reserve's two-day meeting got underway amid investor expectations the U.S. central bank will hike rates on Wednesday. The weakness in gold prices comes a day ahead of the Federal Reserve's decision on interest rates. But with most market participants expecting the Fed to raise rates Wednesday, the Fed's update on monetary policy will likely warrant added attention. Following the Fed's March meeting, most policymakers expected the central bank to hike rates three times in 2018 but a string of bullish data has renewed expectations for a fourth rate hike. Wells Fargo said it expects core PCE - the Fed's preferred measure of inflation – to reach the Fed's 2% target in the third quarter of year, paving the way for the U.S. central bank to hike rates on Wednesday and twice more in 2018.
Copper dropped as positive sentiment was tempered by renewed fears of a global trade war amid a lack of consensus at the G7 summit in Canada - Copper on MCX settled down -
0.08% at 484.60 on long liquidation as the dollar strengthened and BHP responded to a proposal from unionised workers at its Escondida copper mine in Chile. A stronger greenback makes dollardenominated metals more expensive for holders of other currencies and can weigh on prices. Global miner BHP, said it had responded to the latest contract proposal from unionized workers at its Escondida copper mine in Chile, triggering a new round of talks that could last a month or more. Hopes were raised about a settlement at Escondida after unionized workers at BHP’s Spence copper mine in northern Chile agreed on Monday to a new collective labour contract. Last night US dollar index closed at 93.8 overnight, up 0.26%. The index rose over 0.3% at one point after the “truly historic” US-North Korea Summit. Base metals fell across the board overnight. Today traders will be eyeing on the key factors which include the US PPI in May. While trades will remain vulnerable ahead of the upcoming Federal Reserve meeting on Wednesday, when it is widely expected to raise interest rates in what would be its second rate hike this year. Expectations for higher interest rates tend to be bearish for metals, which struggles to compete with yield-bearing assets when rates rise.
Oil Prices Lower Amid Rising Supplies In U.S. -
Oil prices were lower on Wednesday as supplies in the U.S. rose, while expectations that voluntary production cuts led by the producer cartel OPEC could be loosened were also cited as headwind.The American Petroleum Institute (API) reported on Tuesday that crude oil inventories jumped 830,000 barrels last week to 433.7 million, as U.S. crude production surged 28% in the last two years to a record 10.8 million barrels per day. Output in Russia, another top producer, also rose above 11 million barrels per day, according to reports. Looking ahead, the Energy Information Administration (EIA) Official is scheduled to publish U.S. production and inventory data later in the day.
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