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Comments from Fed Officials Affect Commodity Markets Adversely

August 22, 2016 at 8:48 by Vladimir Vyun

Gold and other metals (both precious and industrial) have started week poorly, falling due to prospects for monetary tightening from the Federal Reserve. Fed Vice Chairman Stanley Fischer said on Sunday:

We are close to our targets. Looking ahead, I expect GDP growth to pick up in coming quarters, as investment recovers from a surprisingly weak patch and the drag from past dollar appreciation diminishes.

His words echoed comments from other Fed members, which were optimistic for the most part. The outlook for higher interest rates in the near future buoyed the US currency and drove dollar denominated commodities down.

Contract for delivery of gold in December went down 0.67% to $1,337.2 per troy ounce as of 8:33 GMT on COMEX today. September silver tumbled as much as 1.93% to $18.95 per ounce. Copper for delivery in December lost 1.31% of its value to $2.149 per pound.

Crude oil suffered for the same reason as well as due to speculations that the recent rally was overdone. With the rising number of US oil rigs and small chances for an agreement about production cap, there are just not that many fundamental reasons for the commodity to rally, even though charts suggest otherwise.

September futures for WTI crude oil slid 1.4% to $47.84 per barrel on NYMEX today. Contract for delivery of Brent crude in October dropped 1.49% to $50.12 per barrel on ICE.

If you have any questions and comments on the commodities today, use the form below to reply.

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