Speculations related to ‘patience’ drop on next Federal Open Market Committee (FOMC) boost the US currency against all of its major counterparts and drag down dollar-denominated commodities.
Precious metals suffer these days from permanent bullish trend on US dollar, pushing it to fresh new highs. Gold and silver futures reached even 3-month lows on Wednesday with largest drop in March suffered after current non-farm payrolls data, showing more-than-expected increase in employment, adding to rate-hike bets for mid-year.
Next week’s major focus will turn to FOMC on Wednesday, what could have broad impact on dollar’s strength. If ‘patience’ is dropped, it will only add to actual bullish trend, expected to continue further if no other negative aspects emerge in the statement.
If ‘patience’ is still kept, we may expect sell-off on US dollar a support for gold prices. Current bullish trend on dollar was supported by more Fed’s representatives, last time Fed’s Mester saying that she feels comfortable with June’s rate-hike and Fisher pointing to need of gradual rate-hikes rather than delayed market shock. With the help of last speech of Fed’s Lacker, market turned mostly to belief of June to be the time of rate increase, spurring actual trend.
We may expect calm trading during Monday and Tuesday with investors waiting for the FOMC outcome.
