For those of us still bothering to follow the increasingly tedious Brexit drama in Parliament, we will today be treated to another vote, this time simply on a 12th December election, although as ever, the process is likely to be anything but simple.
Brexit reminds me a lot of Lost. In its early days, Lost was hugely popular and everyone, it seemed, was talking about it. Unfortunately, no one had any idea just how it was going to end and it just went on and on and on until people became bored and frustrated. When it did eventually end, most people had lost interest and those of us that were still watching were doing so more out of stubbornness than anything else. And needless to say, everyone was left disappointed with the ending.
Where Johnson goes today if he doesn’t get the votes in Parliament for an election is anyone’s guess. The very reason why an election is in doubt is exactly the reason it is needed, numbers. Unfortunately, the opposition aren’t particularly keen and Johnson has worked very hard over the last two months to convince MPs that they can’t trust him, to the point that they now don’t. It’s not impossible to get this done but he may be forced to make concessions.
Sterling remains steady throughout this as, regardless of what happens, no deal remains very unlikely and traders aren’t particularly concerned about the political nonsense which takes place in the interim.
Bullish pressures building in gold
Gold remains in consolidation mode on Tuesday but bullish pressures are clearly building as we head into the Fed decision. The rally at the back end of last week quickly ran out of steam as the yellow metal approached $1,520, a level that’s proved a stumbling block throughout October.
That may be discouraging to some but upward pressures are not receding, quite the contrary. Gold is being bought at higher and higher levels which suggests we haven’t seen the end of the assault on $1,520 and at some point, the resistance may well break. Perhaps the Fed will provide the catalyst for this on Wednesday.
Oil buoyed by trade headlines
Oil prices are paring gains again on Tuesday, following an impressive run built primarily on hopes of a phase one trade accord between the US and China. Trump and his team have repeatedly stressed the progress made in recent days and the prospect of it being wrapped up earlier than anticipated, although by now we should take this kind of rhetoric with a pinch of salt.
Oil traders are buoyed though as any de-escalation in the trade war removes hurdles for the global economy and addresses demand side concerns in the energy markets. Brent found resistance around $62 but that may prove temporary if trade headlines continue to improve and central banks keep slashing interest rates. Immediate support may be found around $60 in Brent.
