Metals Market Awaits U.S. Federal Reserve Decision
Tashkent, Uzbekistan (UzDaily.uz) — The metals market remains focused on the U.S. Federal Reserve's upcoming monetary policy decision at the end of July, according to Alpari analyst Anna Bodrova.
Investors are assessing the likelihood that the Fed will keep interest rates unchanged at its upcoming meeting while also factoring in a high probability of a rate increase in the autumn.
Additional uncertainty has come from developments in the Middle East. New exchanges of strikes between the United States and Iran have again affected oil prices and heightened concerns about a possible acceleration in inflation.
Gold is trading at around US$4,020 per ounce, while silver is hovering near US$57 per ounce. Following their recent decline, neither precious metal has shown signs of a sustained recovery. Higher oil prices have strengthened inflation expectations, which could prompt the Federal Reserve to maintain elevated interest rates for longer.
Market estimates put the probability of a rate hike at the September meeting at around 80%, despite expectations that the U.S. central bank will keep rates unchanged at its current meeting.
The prospect of tighter monetary policy remains one of the main factors weighing on precious metals.
Platinum and palladium have also failed to post significant gains despite geopolitical tensions. Platinum is trading at around US$1,600 per ounce, close to its lowest level since the end of last year. Although supply remains constrained, investors are factoring in the risk of weaker industrial demand, particularly from the automotive sector.
Palladium is trading at about US$1,260 per ounce.
In addition to the impact of a stronger U.S. dollar, the market is facing pressure from weaker demand driven by the growth of electric vehicle production and the gradual substitution of palladium with platinum in automotive catalytic converters.
Industrial metals, meanwhile, have shown greater resilience. Copper remains above US$6.2 per pound, although investor activity has eased ahead of the Federal Reserve meeting.
Long-term factors continue to support the market, including the development of artificial intelligence, the construction of data centres, the expansion of energy infrastructure and the transition to a low-carbon economy.
Copper is also supported by supply shortages in China and the possibility of production disruptions in Chile caused by adverse weather conditions.
Overall, the metals market in July remains influenced by two opposing forces. Geopolitical tensions and rising oil prices are strengthening inflation expectations and putting pressure on precious metals through the prospect of higher interest rates.
At the same time, industrial metals continue to benefit from long-term demand linked to technological development and the energy transition.
The outcome of the Federal Reserve's meeting and its subsequent signals on monetary policy are expected to be the key factors shaping the metals market in the coming weeks.
