Waiting on The Fed

With only hours before the United States and North Korea begin their summit in Singapore, gold prices have been holding steady and trading fractionally higher on the day. Of the three major events which are clustered this week, the first was the G7 meeting which was held in Québec over the weekend.

Although the G7 meeting ended with friction between the United States and other member nations (specifically Canada), it did not seem to affect either the equity markets or gold pricing in any dramatic fashion. The Dow closed fractionally higher on the day. Gold futures gained approximately $1.80 to be currently fixed at $1,304.50.

The friction that resulted from comments made by both the president of the United States and the Canadian Prime Minister did not affect the markets. However, the threats of tariffs on both sides of the fence could dramatically change both the dollar value and price of gold.

The upcoming summit will be looked at carefully as traders, and market participants gauge the potential of any real progress emanating from the talks, which would move the needle in terms of the geopolitical climate in Asia. It is the uncertainty of potential outcomes and what effect that outcome will have on the financial markets that are hard to gauge.

Lastly, there is the FOMC meeting which will begin tomorrow and conclude on Wednesday afternoon with a press conference from Chairman Powell. It is widely believed that there will be the implementation of a 25-basis point rate hike which will be announced at the conclusion of this month’s meeting. Of all three events, the FOMC meeting presents the least amount of uncertainty, as traders will look for the tone and timbre of answers Chairman Powell gives during the press conference for indications as to whether or not the Fed will stay the course or become more hawkish or dovish than currently perceived.

With all three events collectively tied to a timeline of a week, it seems unlikely that the financial markets and safe haven assets such as gold will be unaffected as these events come to their inclusion.

Wishing you as always, good trading,