Commodity Roundup: Oil prices down, gold steadies as focus shifts to Fed rate decision

Crude oil prices fell on Thursday after a choppy trading in the previous session as investors assessed Donald Trump’s return. Gold prices meanwhile held steady, with markets bracing for the Federal Reserve’s policy path and whether officials will slow the expected pace of rate cuts.

Brent futures (CO1:COM) eased -0.65% to $74.43 a barrel by 5:43 am ET, U.S. West Texas Intermediate crude (CL1:COM) shed -0.85% to $71.08. Both the contracts initially fell 2% on Wednesday, but finished in the green.

Concerns remain about potential higher tariffs on Chinese goods and a tit-for-tat trade war following Trump’s victory in the U.S. presidential election and its implication on demand in the world’s second-largest consumer.

Regarding interest rates, traders are betting that Trump’s plan to cut taxes and raise tariffs will push up inflation and reduce the pace of interest rate cuts. Higher rates for longer mean a strong dollar, which makes commodities priced in greenback expensive for other currency holders, such as oil, gold.

Energy equity thoughts: Based on different approaches to the energy transition, Wells Fargo believes a Trump admin would be more favorable to the energy sector and equities.

A Trump administration that constrains the energy transition favors the refiners Marathon Petroleum (MPC), Valero (VLO), Phillips 66 (PSX), IOCs Exxon (XOM) Chevron (CVX) and Shell (SHEL) and gassy E&Ps EQT (EQT), Range Resources (RRC) with slightly stronger energy demand trends.

“We expect a general deregulatory bent from both executive orders and even with legislation – depending on the outcome of the House.”

On the geopolitics front, if as promised on the campaign trail Trump can deescalate ongoing conflicts in a relatively short period of time, “we could see downward pressure on oil & gas prices.”

ETFs: (NYSEARCA:USO), (BNO), (UCO), (SCO), (USL), (DBO), (DRIP), (GUSH), (USOI), (UNG), (BOIL), (KOLD),(UNL), (FCG)

The Federal Open Market Committee, which sets rate policy, began a two-day meeting on Wednesday, with an interest-rate decision due on Thursday at 2 p.m. ET. Fed Chair Jerome Powell will hold a press conference beginning at 2:30 p.m.

Gold prices (XAUUSD:CUR) ticked up +0.07% to $2,665.81 an ounce, after falling over 3% to hit a three-week low in the previous session as the dollar eased slightly. Silver (XAGUSD:CUR) -0.13% to $31.13.

Elsewhere, China’s central bank refrained from purchasing gold for its reserves for the sixth consecutive month in October, according to official data.

ETFs: (GLD), (GDX), (GDXJ), (IAU), (NUGT), (PHYS), (GLDM), (AAAU), (SGOL), (RING), (BAR), (OUNZ), (SLV), (PSLV), (SIVR), (SIL), (SILJ)