Commodities slumped the most since July, led by a drop in crude oil and industrial metals, as Dubai’s attempt to reschedule its debt rattled investors and spurred a strengthening in the dollar.
The S&P GSCI index of 24 commodities fell as much as 4.2 percent, the biggest drop since July 29. The index, which didn’t price on Thursday because of the Thanksgiving Day holiday, traded 3.6 percent lower at 496.355 as of 11:17am in London. Gold fell the most since January and oil retreated to a six-week low.
The declines are “a correction reflecting the unfortunate timing of the Dubai news which spooked the markets,” Daniel Major, a London-based commodity analyst at RBS Global Banking and Markets, said by telephone. “The sharp rally in the dollar is also driving gold.”
Commodities, as measured by the S&P GSCI, jumped as much as 50 percent this year, amid the worst global recession since World War II. Copper and lead more than doubled and crude oil advanced as much as 82 percent as Chinese demand expanded and producers curbed supply. Investors are “chasing commodities” and there is a risk of bubbles emerging, Nouriel Roubini, the New York University professor who predicted the global financial crisis, said a week ago.
The US Dollar Index, a six-currency gauge of the greenback’s value, rose as much as 1 percent, strengthening for a second consecutive day. A stronger dollar makes commodities denominated in the currency more expensive for those holding other monies. Some investors also buy commodities as a hedge against a weaker dollar.
Gold for immediate delivery lost as much 4.2 percent, the biggest intraday decline since Jan. 12. The metal traded at a record US$1,195.13 on Thursday and has advanced 32 percent this year, the best performance since 1979. Silver shed 3.6 percent to US$17.9975 an ounce.
Holdings in the SPDR Gold Trust, the biggest exchange-traded fund backed by bullion, reached a record 1,134 tonnes in June. At the time, it exceeded Switzerland as the world’s sixth-largest gold holding.
“The fundamental reason for gold remains unchanged,” said Janet Kong, a commodity analyst at Goldman Sachs (Asia) LLC in Hong Kong. “This is a good pullback for people who want to have positions in it.”
Crude oil fell as much as 7.1 percent to US$72.39 a barrel on the New York Mercantile Exchange, where markets didn’t settle on Thursday because of the public holiday. That was the lowest compared with intraday prices since Oct. 12.
Lower-than-average volumes are being traded in commodity markets, RBS’ Major said.
“You can’t read too much into this,” he said.
Copper for delivery in three months fell 1.2 percent to US$6,738 a tonne on the London Metal Exchange, declining for a second day and paring its annual gain to 119 percent. Aluminum, nickel, zinc, tin and lead also dropped.
“Base metals are the commodity category with the highest correlation to equity markets and therefore suffered more than other commodity categories from the equity market sell-off,” Tobias Merath, head of commodities research at Credit Suisse in Zurich, wrote in an e-mailed report yesterday.
UNCERTAINTIES: Exports surged 34.1% and private investment grew 7.03% to outpace expectations in the first half, although US tariffs could stall momentum The Chung-Hua Institution for Economic Research (CIER, 中華經濟研究院) yesterday raised its GDP growth forecast to 3.05 percent this year on a robust first-half performance, but warned that US tariff threats and external uncertainty could stall momentum in the second half of the year. “The first half proved exceptionally strong, allowing room for optimism,” CIER president Lien Hsien-ming (連賢明) said. “But the growth momentum may slow moving forward due to US tariffs.” The tariff threat poses definite downside risks, although the scale of the impact remains unclear given the unpredictability of US President Donald Trump’s policies, Lien said. Despite the headwinds, Taiwan is likely
When Lika Megreladze was a child, life in her native western Georgian region of Guria revolved around tea. Her mother worked for decades as a scientist at the Soviet Union’s Institute of Tea and Subtropical Crops in the village of Anaseuli, Georgia, perfecting cultivation methods for a Georgian tea industry that supplied the bulk of the vast communist state’s brews. “When I was a child, this was only my mum’s workplace. Only later I realized that it was something big,” she said. Now, the institute lies abandoned. Yellowed papers are strewn around its decaying corridors, and a statue of Soviet founder Vladimir Lenin
UNIFYING OPPOSITION: Numerous companies have registered complaints over the potential levies, bringing together rival automakers in voicing their reservations US President Donald Trump is readying plans for industry-specific tariffs to kick in alongside his country-by-country duties in two weeks, ramping up his push to reshape the US’ standing in the global trading system by penalizing purchases from abroad. Administration officials could release details of Trump’s planned 50 percent duty on copper in the days before they are set to take effect on Friday next week, a person familiar with the matter said. That is the same date Trump’s “reciprocal” levies on products from more than 100 nations are slated to begin. Trump on Tuesday said that he is likely to impose tariffs
READY TO BUY: Shortly after Nvidia announced the approval, Chinese firms scrambled to order the H20 GPUs, which the company must send to the US government for approval Nvidia Corp chief executive officer Jensen Huang (黃仁勳) late on Monday said the technology giant has won approval from US President Donald Trump’s administration to sell its advanced H20 graphics processing units (GPUs) used to develop artificial intelligence (AI) to China. The news came in a company blog post late on Monday and Huang also spoke about the coup on China’s state-run China Global Television Network in remarks shown on X. “The US government has assured Nvidia that licenses will be granted, and Nvidia hopes to start deliveries soon,” the post said. “Today, I’m announcing that the US government has approved for us
RSS