Hansen: Downside risk on gold as taper looms
"There’s really only one thing that matters for gold and silver; the FOMC meeting". So says Saxo Bank's Head of Commodity Strategy, Ole Hansen, when he talks about what investors should look out for next week. The Federal Reserve is meeting on 18 December, and after getting encouraging data out of the US, analysts believe there's a chance the central bank could begin tapering.
Ole adds that the upside potentials for gold and silver are "fairly limited at the moment", so he prefers to trade the metals from the short side.
Speaking about crude oil, Ole says we’re now entering the low liquidity part of the year, and with the holiday season around the corner, most traders are shutting down their books. Therefore, Ole think the most likely outcome for energy markets next week is range trading; WTI at the 96-99 dollar range and brent crude at the 106-110 dollar range.
Meanwhile, things are looking up for copper thanks to inventories in Shanghai and London being reduced, which is lending support. And an upbeat assessment of global inventories of wheat sent both Chicago (-2,7) and Paris wheat (-2,6) lower. Ole also says Paris milling wheat fell to a three week low as a stronger euro help offset continued strong export demand.
Read more about Ole's predictions here: