Caution prevailed across major markets on Wednesday before a potentially tense meeting between U.S. President Donald Trump and his Chinese counterpart Xi Jinping this week, although metals and oil prices firmed on a hope of better global demand.
The word “gradual" was all the markets had to hear. The Fed as expected, raised interest rates but signaled rate increases in the future would come at a gradual pace. That assurance was enough to cause the stock market to soar and the dollar to pull back and added momentum to oil that received some friendly data from The Energy Information Administration (EIA). That means that gradually the oil glut should start to disappear.
Gold prices were steady on Tuesday as investors waited for the start of a two-day U.S. Federal Reserve meeting where the central bank is widely expect to raise interest rates. Signs of an uptick in inflation and continued strength in the U.S. jobs market are expected to convince the Fed to hike rates when the meeting concludes on Wednesday.
Thanks to a generally stronger dollar amid heightened expectations of a faster-tightening cycle from the Fed, market participants have apparently reduced their holdings in buck-denominated precious metals.