News and Analysis
* US Fed hikes rates to a target range of 0.75 to 1 percent.
* Euro zone’s Final CPI unchanged at 2 percent in Feb’17.
* LME Copper stocks fell by 0.4 percent on Wednesday.
European stocks are trading higher today as the Federal Reserve went ahead with rate hike but added that further increases would only be "gradual". Asian markets ended higher and the US stock futures are trading in the green. Gold prices are trading higher by 0.4 percent at $1223 per ounce while MCX gold prices are trading higher by 1.5 percent at Rs.28396 per 10 gms.
Gold hit a one-week high on Thursday after the U.S. Federal Reserve signaled a cautious stance on interest rate policy this year, pushing the dollar to its lowest in a month. The Fed on Wednesday raised interest rates for the second time in three months, with officials sticking to their outlook for two more rate hikes this year and three more in 2018
LME Copper prices are trading higher by 0.9 percent at $5940.5 per tonne as US Federal Reserve lifted its funds rate by 25 basis points to a target range of 0.75 to 1 percent, but signaled a dovish tone in terms of pace, thereby leading to weakness in the DX. The Fed maintained its stance on three rate hikes this year. The forecast for 2017 GDP remains 2.1 percent, while 2018 was pushed up one-tenth to 2.1 percent. Also, persistent supply disruption concerns in Chile, Peru and Indonesia is acting as a positive factor. MCX copper prices are trading higher by 1 percent at Rs.390.7 per kg.
NYMEX oil prices are trading higher by 1 percent today at $49.36/bbl while MCX oil prices are trading higher by 1.45 percent at Rs.3234/bbl. Crude oil prices rose on Thursday to extend gains from the previous session after official government data showed U.S. stockpiles had eased from record highs. Prices surged on Wednesday after a slew of market reports and official data offered some hope that a near three-year global glut in oil is coming to an end, albeit more slowly than many have anticipated.
We expect gold prices to trade higher today, as the FED hikes rate by 25 bps, while they also pointed to gradual rate hike in 2017. Weak dollar index would also be supportive factor for the yellow metal.
Oil prices are trading positive today, hence we can expect some positive momentum in the evening session. However, a note of caution as the Euphoria caused by the FED outcome may fade soon and markets will come back in its own fundamentals of demand and supply.
Copper prices are likely to trend sideways as weaker dollar after an expected rate hike and dovish tone by the US Fed along with reassurance by China that the economy is strong enough is supporting prices.
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