Financial Analyst/Content Writer, RADEX MARKETS
Lawrence J. came from a strong technical and engineering background before pivoting into a more financial role later on in his career. Always interested in international finance, Lawrence is experienced in both traditional markets as well as the emerging crypto markets. He now serves as the financial writer for RADEX MARKETS.
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Yesterday’s FOMC meeting provided more drama than most traders were expecting. The Federal Reserve elected to leave interest rates unchanged, to the surprise of no one, but during the subsequent press conference, Fed Chairman Jerome Powell floated the dreaded possibility of a rate hike. This would have been unthinkable just a few months ago, but the threat of inflation resulting from a prolonged conflict in the Middle East has changed the playing field. A rate hike remains unlikely in the immediate future, but the mere mention of such has sent shockwaves throughout financial markets.
Precious metals were among the hardest hit. Gold plummeted all the way down to $4,500 per ounce at one point before rebounding to $4,650 by the daily close, a loss of 3.5% on the day. The price action in silver was even more extreme, with the white metal dipping to just $65 per ounce before climbing back up to $72 by the end of the session. The dollar currency index also took a decent hit, falling from 100.2 to 99.1 on Thursday, while US indices incurred only minor losses.
Oil markets continue to provide entertainment. The Brent Crude index shot all the way up to $114 yesterday before settling lower, but the more interesting point of note is the widening gap between Brent and WTI. Seaborne futures are currently trading for around $105 per barrel, while West Texas Intermediate futures are a mere $92 in comparison. The last time the spread was this high was over a decade ago. Brent Crude remains at the mercy of acute supply disruptions in the Middle East, which are affecting oil deliveries around the world and adding a considerable premium to prices. WTI meanwhile is relatively isolated from such concerns, with supplies remaining stable and contracts being priced accordingly. The lack of oil shipments out of the Persian Gulf has forced many countries to pursue alternative procurement options. Japanese refineries have stepped up purchases of Midland crude to cover the shortfall in regular deliveries, while other countries in Asia are also diversifying their oil suppliers.
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