Commodity Blog

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Commodities Under Pressure as ECB Doesn’t Want to Help Europe

December 9, 2011 at 2:13 by Vladimir Vyun

Commodities slumped yesterday after the European Central Bank signaled that it’s not going to expand its bond purchases. The central bank took steps for helping the eurozone by lowering its main interest rate by 25 basis points and it also announced measures to support the bank lending and money market activity. But market participants were disappointed as they were hoping for more involvement from the ECB.

It’s not surprising to see commodities like oil and copper among the losers, but gold again unpleasantly surprised gold bulls. Analysts again named fears of deflation as a reason for the bearishness of gold. The previous high prices of the precious metal were caused by the expectation that central banks would start printing money, inflating the financial system. The ECB still refuses to do so and it doesn’t look like the US Federal Reserve is going to announce a quantitative easing anytime soon. That was a great disappointment for gold.

Brent crude oil traded at $108.07 per barrel today as of 2:00 GMT on ICE, following yesterday’s slump from $109.60 to $107.55 per barrel. Gold was near $1,711.90 per ounce on COMEX today after on the previous trading session it dropped from $1,742.0 to $1,707.90 per ounce. Copper slid from $3.5500 to $3.4755 per pound yesterday.

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

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