Gold, silver price likely to see rebound ahead of FOMC meeting next week

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COMEX Gold prices touched an all-time high of $2,152.3 per troy ounce earlier in the week, driven by investor bets on Fed rate hikes. However, the prices retraced their gains as the US dollar strengthened, and a robust US labour report suggested that aggressive pricing of Federal Reserve rate cuts might have been excessive. Gold saw a significant 3 percent drop during the week, while Silver ended with a substantial 10 percent decline, influenced by the increasing opportunity cost of holding bullion amidst the potential for a prolonged period of restrictive interest rates.

On the price action front, the extensive selling observed in precious metals appears to have been exaggerated following the release of the US labour market report. Both gold and silver have concluded trading sessions in proximity to their support levels. There is a possibility of a rebound as we approach the upcoming FOMC meeting next week.

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WTI Crude managed to hold steady above $70 a barrel, but sustained near five-month lows, marking the seventh consecutive week of decline. Oversupply concerns overshadowed optimism from OPEC+'s plans to rein in production into 2024. The EIA report indicated a significant inventory build in gasoline and distillates, offsetting the crude draw.

In the beginning, prices found support as Saudi Arabia assured the markets of its commitment to output cuts. However, market skepticism persisted regarding the compliance of other OPEC+ members with voluntary reductions. Worries over a potential supply glut triggered a significant pullback in prices, with figures dropping from $75 a barrel to $68.8 a barrel throughout the week.

LME base metals faced downward pressure following Moody's downgrade of Chinese sovereign bonds, highlighting global concerns over debt levels. Despite starting the week positively, driven by a rise in Caixin services PMI, concerns persisted, especially after data revealed a contraction in both official manufacturing and services PMI in November.

Looking ahead, a slew of economic events is lined up for the coming week. The monetary policy meetings of the Federal Reserve, European Central Bank, and Bank of England are expected to drive currency markets and the Dollar. Analysts anticipate that US policymakers will maintain interest rates at a 22-year high, prompting investors to scrutinize the Fed's statement and Chair Jerome Powell's press conference for hints regarding potential rate cuts in 2024.

Additionally, US inflation numbers, retail sales data, along with Western PMIs and Chinese industrial production, will be closely monitored.

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