Brent crude edged lower on Tuesday despite the fact that Iran reiterated its threat it would block the Straits of Hormuz if the western countries manage to block its exports of oil. However, despite an escalating diplomatic clash, the market remains rather calm. A situation in the physical market slightly improved compared to previous months and although stocks remain below 5 year average, recent trend has been relatively positive (according to IEA OMR). Hence, Brent timespreads have decreased during recent sessions.
The most of base metals posted some gains on Tuesday. Although copper was an exception as its price slightly eased, it remains well above 8000 USD per ton. However, let us remain that China’s consumers are not present at the market this week due to national holidays.
Gold is hovering at 1665 USD per troy ounce level today in early trading, ahead of the Fed’s policy meeting. Regarding the meeting, the FOMC most likely won’t take new measures, but nevertheless will give investors enough opportunity to chew on the new communication strategy. The Fed will now also publish governor’s projections regarding the timing of the first rate hike and their projections for the FF rate in Q4 of 2012 and the next four years. The FOMC is widely expected to be soft (downplaying the recent improvement) and within the new framework, they will probably indicate that stimulation will be maintained beyond mid 2013 which might be, in theory, negative for the dollar and supportive for gold. However, the question is how much is already priced in…