Oil And Gold Analysis: Oil Prices Up, Gold Holds Steady

CL
Oil prices rose in early afternoon trading on Wednesday, buoyed by news that U.S. supplies fell more than expected last week, though uncertainty over the Federal Reserve's looming policy announcement due out later in the session capped gains. The U.S. Energy Information Administration reported in its weekly report earlier that U.S. crude oil inventories fell by 2.9 million barrels in the week ended Dec. 13, beating expectations for a decline of 2.3 million barrels. Total U.S. crude oil inventories stood at 372.3 million barrels as of last week, and the data sent prices gaining by stoking sentiments that demand for fuel and energy in the U.S. may be heavier than once anticipated The report also showed that total motor gasoline inventories increased by 1.3 million barrels, short of expectations for a gain of 1.9 million barrels. Solid data out of the U.S. housing sector boosted oil prices as well. The Census Bureau reported earlier U.S. housing starts rose to 1.09 million units last month, from 890,000 in October, beating consensus forecasts for an increase to 950,000 units. Building permits in the U.S. fell 3.1% to 1.01 million units in November, from 1.04 million units the previous month. Still, analysts were expecting building permits to drop 4.7% last month.

GOLD
Gold prices held steady in afternoon trading on Wednesday as investors remained on the sidelines ahead of the Federal Reserve's statement on monetary policy and the fate of its USD85 billion monthly bond-buying program due out later in the day. Gold holds steady as market awaits Federal Reserve policy statement Bond purchases seek to boost recovery by pushing down interest rates, weakening the dollar in the process and making gold an attractive hedge. The Federal Reserve is due to release its December statement on interest rates and whether or not it will make changes to its USD85 billion in monthly bond purchases. Investors avoided gold ahead of time, as a decision to taper the pace of its asset purchases could lead to price swings, while a decision to punt scaling back the stimulus program could send prices gaining. Gold prices have fallen in recent sessions as investors priced in less monetary support from the U.S. central bank, though uncertainty as to how the precious metal will react to an actual announcement allowed for quiet but edgy trading.