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- Gold consolidated ahead of the FOMC’s meeting, where a rate cut is expected alongside forecasts for 2026.
- Oil was exposed to volatility due to supply changes and geopolitical tensions, mainly the conflict between Ukraine and Russia.
- Copper retreated from record highs on uncertainty of Fed expectations, while silver surged to a new record high, driven by tight supply and strong ETF inflows.
Commodities traded cautiously ahead of the highly anticipated Fed meeting, as traders positioned themselves across gold, oil, copper and silver with other macro factors driving prices.
Gold Steadies as Traders Brace for High-Stakes Fed Decision
Gold remained steady, trading between $4,220 and $4,170 as traders treaded carefully ahead of the FOMC meeting. Markets are focused on the Fed’s forecasts, dot plot and press conference. All these factors could impact expectations for the 2026 rate cycle path.
Additionally, since Fed Chair Powell may indicate a cautious approach to easing because of inflation risks, markets anticipate a hawkish cut from the central bank. ⁽¹⁾
Gold 4H Chart / Source: TradingView
Oil Faces Volatility Ahead of Fed, Supply Shifts, and Peace Talks
Oil markets remained volatile, with prices continuing to whipsaw as traders monitor supply developments, geopolitical tensions and the upcoming FOMC decision.
Brent Oil 4H Chart / Source: TradingView
Prices fell after Iraq restarted production at Lukoil’s West Qurna field, which eased supply concerns. Crude oil exports by Saudi Arabia to China are set to touch a three-month high in January after the kingdom reduced its prices to Asia. ⁽²⁾
Moving on to geopolitics, Ukraine’s ongoing attacks on Russian energy infrastructure threaten to disrupt production and exports into other markets. Disruptions occurred at the Caspian Pipeline Consortium export terminal in the Black Sea.
At the same time, Ukraine is preparing a revised peace proposal for the US following high-level talks in London involving the UK, France and Germany. ⁽³⁾
Adding another layer of uncertainty, the G7 and EU are considering replacing their Russian oil price cap with a full maritime services ban, a move aimed at curbing Moscow’s energy revenues. ⁽⁴⁾
Across the Atlantic, tensions are rising between the US and Venezuela. A loss of Venezuelan oil due to a US military intervention could cause prices to surge as Asian markets would need to find a new supplier instead of Venezuela.
Copper Retreats from Record High
Copper (LME-priced) pulled back from an all-time high ahead of a US Federal Reserve meeting this week that should offer clues to the trajectory of the US economy.
Copper (LME) Daily Chart / Source: TradingView
Copper prices were recently driven to record highs by expectations that supply will remain tight outside the US market and by mine disruptions. ⁽⁵⁾
China’s CPI accelerated to a 21-month peak in November, but producer deflation persisted even as the government stepped up its campaign to curb overcapacity in some key sectors. ⁽⁶⁾
Copper has gained more than 30% on the London Metal Exchange this year. Its rally accelerated in recent weeks as metal is stockpiled in the US in anticipation of tariffs, leading to shortages and record premiums elsewhere. ⁽⁷⁾
China’s plan to keep using strong fiscal support and focus on boosting domestic growth next year also helped push prices higher.
Silver Surges to a New Record High as ETF Inflows Surge
Silver reached a new all-time high at $60 after stronger expectations for a Fed rate cut and tightened physical supplies. Data also showed the strongest ETF inflows since July. Total holdings surged by 590 tons as markets increased their positions due to Fed rate cut expectations. ⁽⁸⁾
Silver 4H Chart / Source: TradingView
Industrial demand remains high while mine production is failing to keep up with demand, creating a deficit.
The market is also still dealing with the aftershocks of a historic short squeeze in London due to tight supply, high premiums and constrained deliverability ⁽⁹⁾
