The selloff in commodities slowed Wednesday, but gold continued to slide, as did oil, Wall Street shares rose though, the US dollar continued to make gains and the minutes of the US Federal Reserve last meeting – when it boosted its key rate by 0.75% – came and went without leaving a hole in confidence.
The weakness in gold stood out for a second day in a row as the price again fell more than 1%.
Gold in fact fell to the lowest in nine months, dropping for a seventh-straight session as US bond yieldsand the US dollar rose after the release of the Fed minutes.
Comex gold for August delivery closed down $US27.40 to $US1,736.50 an ounce, the lowest since the end of last September.
Gold’s pain will mean more weakness today on the ASX for gold miners (and oil’s small fall won’t help the likes of Woodside or Santos either).
Despite that the overnight futures market was up 38 points at 6.30am Thursday.
The US dollar pushed higher with the ICE dollar index was last seen up 0.51 points to 107.09, after earlier touching 107.26, the highest since the (northern) autumn of 2002.
“Demand for all commodities, including gold, is being pummelled as funds offload due to recession fears,” Daniel Ghali, commodity strategist at TD Securities, told Reuters.
“We could see gold traders react to the Fed’s hawkish tilt. We continue to see gold fall over the next six months and prices hitting below $1,700 is on the cards.”
The Dow added 69.86 points, or 0.23%, to end the session at 31,037.68, the S&P 500 rose 0.36% to 3,845.08 and Nasdaq was up 0.35% to close at 11,361.85.
Wall strengthened after the Fed minutes were released.
Iron ore and coal prices were weaker thought, but slide in copper slowed and after a small loss for the session, firmed in early Asian dealings and was around $US3.44 a pound at 6.30am.
Oil also fell – losing more ground to be well under $US100 a barrel for US West Texas Intermediate ($US98.53 settlement in New York) while Brent eased to settle at $US100.58 a barrel.
US 10-year bond yields leapt 12 points to 2.92%, yields rising after the release of the Fed minutes. That helped the US dollar higher and gold lower.
The Fed minutes revealed fears among officials that entrenched inflation poses a “significant risk” to the US economy, according to an account of their most recent meeting.
According to the minutes of the June meeting, Fed officials believed that even tighter monetary policy may be needed to stave off a destabilising economic cycle that would further stoke price pressures.
Hence the 0.75% increase in the Federal Funds Rate at that meeting and forecasts for another later this month.
Meanwhile grain and soybean futures on the Chicago Board of Trade, the world’s biggest rural commodities market tumbled to multi-month lows on Wednesday as fears about a global recession fuelled liquidation in the markets.
The most-active soybeans were down 4 cents at $US13.12 a bushel and hit their lowest level since late last December. 21.
Wheat lost 10.75 US cents to $US7.796 a bushel and touched its lowest price since February 17 – that’s pre the Ukraine invasion by Russia. It ended at $US7.9325 a bushel.
And most-active corn futures fell to the lowest price since November 30 at $US5.6650 a bushel. The contract settled at $US5.85 a bushel.
