Global commodity prices dived this week, in line with world stock markets, on concerns over the US Federal Reserve ending its multibillion dollar economic stimulus measures, as well as owing to poor Chinese manufacturing data, analysts said.
“The Fed has been the common denominator behind the moves across the whole of financial markets this week with commodities taking the brunt of the selloff,” said Fawad Razaqzada, an analyst at traders GFT Markets.
“This is due to the fact they are all priced in US dollars which has been a star performer after [Fed Chairman Ben] Bernanke signaled the Fed’s intention to withdraw its support by mid next year — a lot sooner than was apparently priced in,” Razaqzada said.
OIL: Crude oil prices tumbled, with Brent North Sea crude suffering its biggest drop since early November — losing almost US$4 a barrel on Thursday.
New York’s main contract ended down US$2.84 the same day, while prices fell further on Friday.
The oil market had on Thursday joined a global selloff in markets in response to Bernanke’s comments. Crude futures were also hit by poor manufacturing data from China, with HSBC’s preliminary purchasing managers’ index hitting 48.3 this month, worse than May’s final reading of 49.2 and its lowest since September.
By Friday on London’s Intercontinental Exchange, Brent North Sea crude for delivery in August plunged to US$100.19 a barrel from US$105.93 a week earlier for the expired July contract.
On the New York Mercantile Exchange, West Texas Intermediate (WTI) or light sweet crude for August stood at US$93.24 a barrel compared with US$97.63 for the July contract a week earlier.
PRECIOUS METALS: Gold and silver prices slumped close to three-year low points after the Fed signaled that it would wind down its massive stimulus program.
Gold on Friday hit US$1,269.45 an ounce — the lowest level since mid-September 2010.
The precious metal had been hit by a rising US dollar, making US dollar-priced gold more expensive for buyers using rival currencies, thereby weighing on demand.
Gold fell also on receding inflationary concerns, with many investors arguing that quantitative easing stimulus fuels price hikes.
By late Friday on the London Bullion Market, the price of gold retreated to US$1,295.25 an ounce from US$1,391.25 a week earlier.
Silver dropped to US$19.87 an ounce from US$21.69.
On the London Platinum and Palladium Market, platinum fell to US$1,395 an ounce from US$1,448.
Palladium decreased to US$672 an ounce from US$728.
BASE METALS: Base or industrial metal prices dived in line with the precious complex.
By Friday on the London Metal Exchange, copper for delivery in three months fell to US$6,810 a tonne from US$7,089 the prior week.
Three-month aluminum slid to US$1,795 a tonne from US$1,858. Three-month lead fell to US$2,026 a tonne from US$2,110. Three-month tin slid to US19,605 a tonne from US$20,240 and three-month zinc fell to US$1,849 a tonne from US$1,858.