I. Precious Metals
Gold

Spot gold was up 1 percent at $1,255.38 an ounce after the Fed raised its benchmark interest rates by 25 basis points to 1.25-1.50 percent, and is expected to raise three more times in 2018. Two known doves, Minneapolis Fed President Neel Kashkari and Chicago Fed President Charles Evans dissented. The core CPI was closely watched ahead of Fed’s decision on rates increase after the annual increase slowed to 1.7 percent in November from 1.8 percent in October.

Fed’s decision and gold performance were in line with anticipations as we said yesterday, “Yellen is expected to make a hawkish statement tonight. We need to closely watch gold’s movement shortly after her speech. If it falls slightly at a moderate pace, current prices can be determined as a safe level for bargain hunting.” Bullion held well shortly after Fed’s statement, proving our strategy.

We believe that the U.S. central bank is unlikely to raise interest rates for three times due to downbeat inflation data, suggesting weak foundation for interest rate hike. Two Fed official’s opposition also undermines the new Fed Chair’s influence. The decision and its long-term implications could be catastrophic to the dollar. A rate outlook of three more increases also imposes negative impact on stock market, causing new problems. From every prospective, safe-haven products could get strong boost.

Silver

Silver surged 2.2 percent to $16.06 an ounce, confirming our view that “We also need to closely watch its first response to U.S. interest rate hike. Investors don’t have to worry as long as there’s no sharp losses.” We maintain our view to long silver, expecting a safe zone up to $17.

II. Commodities
Crude Oil

U.S. West Texas Intermediate crude settled down 54 cents at $56.60 a barrel, a 1 percent decline. Brent crude ended down 1.4 percent, or 90 cents, at $62.44 a barrel. U.S. crude inventories last week dropped 5.1 million barrels, more than anticipated, and production hit another record high at 9.78 million barrels per day (bpd), government data showed.

We said yesterday, “Crude prices are unlikely to set new record highs due to the gains in the past six months. Buying is not recommended as crude is expected to either rise after consolidating at highs for an extended period, or rise after pullback”, in line with market conditions. We maintain our view.

Copper

London Metal Exchange copper ended the day up 1 percent at $6,729 a tonne on Wednesday. Copper plunged 4 percent on Dec. 5, its biggest one-day drop in two years. It has since recovered some but not all of those losses. Investors are not expected to long the metal despite that a weaker dollar would provide a floor to prices in coming sessions.

Soybean

Soybean futures firmed on Wednesday on technical buying and short covering, snapping a streak of five straight declines. CBOT January soybean futures closed up 3-1/2 cents at $9.79-1/4 a bushel. January soymeals were up $2.1 at $326.8 per short tonne. December soyoil ended down 0.24 cents at 33.21 cents per pound.

Dealing Room, ICBC Beijing Branch
                        Zhao Yifei