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Commodities in Decline After Fed Statement

October 29, 2015 at 6:12 by Vladimir Vyun

Commodities declined following the monetary policy statement from the Federal Reserve. While the Fed has not changed its policy just yet, it hinted that a December interest rate hike remains a definite possibility. Such unusually bold and open language caught dove off guard and reignited speculations about monetary tightening in the near future. Speculations that had almost died off before.

The reaction to the statement was predictable: the dollar surged while commodities declined. Of course, the statement did not guarantee a December rate lift-off, and it just said that policy makers will consider such move. Yet it was enough to bolster the dollar’s strength, and this is not a good outcome for the commodity market.

December futures for gold slid 1.38 percent to $1,159.9 per troy ounce as of 6:01 GMT on COMEX today. Silver tumbled 2.32 percent to $15.92 per ounce. Contract for copper declined 0.47 percent to $2.3515 per pound. Futures for delivery of WTI crude oil dropped 0.54 percent to $45.69 per barrel on NYMEX. Brent oil went down 0.55 percent to $48.78 per ounce on ICE.

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