This will be the last full week of trading in 2015 and it will be highlighted by the FOMC interest rate decision that comes on Wednesday. While it appears the first U.S. interest rate hike in over 9 years is coming this week it is news that is likely priced into all markets. Therefore, it will be the tone of Chair Yellen’s comments (dovish or hawkish) that will dictate the reaction of all global markets. Given the FOMC’s focus on being data driven, I expect the comments to follow the rate decision to be dovish. The sharp decline in oil prices (no inflation) and signs of weak consumer spending as witnessed by last week’s retail sales figures will make it very difficult (in my opinion) for additional rate hikes to follow anytime soon.
In early trading today gold and silver are being pressured by yet another drop in crude oil prices along with a marginally stronger USD. Platinum and palladium are higher but off the day’s best levels as reported physical buying out of China may have caused a few of the “shorts” to cover positions and lock in profits. In the short term, look for gold support from the mid $1,060.00’s through the mid $1,050.00’s. A break below could see a run at $1,025.00. Resistance at the moment looks formidable above $1,080.00. Silver may be the catalyst for what gold does in the coming days. While it continues to “feel” vulnerable and a look at $13.25 appears to be in the cards, a move back up towards $14.40 on the back of physical demand and short covering would not be a shock.