Gold tumbled this week to a four-year low and many other commodities also faltered, as the US dollar rebounded after the US Federal Reserve ended its quantitative-easing (QE) stimulus.
The euro dived below US$1.25 for the first time in more than two years, driven also by speculation that the US central bank could raise borrowing costs sooner than expected.The stronger greenback makes US dollar-priced raw materials more expensive for buyers using weaker currencies, which tends to dent demand and prices.
PRECIOUS METALS: Gold dived on Friday to US$1,161.16 per ounce, the lowest point since late July 2010.
Gold has fallen sharply since the Fed said on Wednesday that it would end its QE policy, after six years of pumping easy money into the US economy via asset purchases to shore up growth.
Official data showed on Thursday that the US economy grew at an annualized 3.5 percent in July-September. That beat expectations for a 3 percent rise. The reading, coupled with upbeat comments about the jobs market from the Fed, stoked speculation that it could hike interest rates earlier than its timetable of the middle of next year.
“The gold market again reacted negatively to the prospect of rate hikes, highlighting how sensitive the market has again become to tighter monetary policy,” Barclays analyst Suki Cooper said.
“We continue to believe the prospect of firmer [interest] rates, coupled with our expectation for a stronger dollar, present significant headwinds for gold,” she said.
Sister metal silver slid to US$15.76 per ounce, a nadir last witnessed in February 2010.
In contrast to the Fed, the Bank of Japan (BOJ) ramped up its vast monetary easing program on Friday, in a shock move aimed at reviving growth.
“The BoJ’s surprise announcement ... provided the stock markets and the US dollar an extra push which reduced the appetite for safe haven gold even more,” Forex.com analyst Fawad Razaqzada said.
By late Friday on the London Bullion Market, the price of gold tanked to US$1,164.25 an ounce from US$1,232.75 a week earlier.
Silver declined to US$16.20 an ounce from US$17.19.
On the London Platinum and Palladium Market, platinum weakened to US$1,227 an ounce from US$1,254.
Palladium was unchanged at US$784 an ounce.
OIL: Prices slid on heightened expectations of rising US borrowing costs and on stubborn concern over plentiful crude supplies.
New York crude had fallen to two-year lows and Brent to its lowest levels in four years last month, due to oversupply and weak demand from slowing world economies.
OPEC secretary-general Abdullah El-Badri said on Wednesday that market conditions did not justify recent sharp falls for crude futures and signaled that the cartel would maintain output through next year.
By Friday on London’s Intercontinental Exchange, Brent North Sea crude for delivery next month slid to US$85.36 a barrel from US$86.03 one week earlier.
On the New York Mercantile Exchange, West Texas Intermediate or light sweet crude for next month recoiled to US$80.18 a barrel compared with US$81.38 a week earlier.
BASE METALS: Base or industrial metal prices mostly rose, boosted by the Bank of Japan’s surprise stimulus boost and upbeat Chinese data.
“Nickel and aluminum received a fillip from the unexpected monetary stimulus boost from Japan and adding to this a small rise in Chinese manufacturing PMI [purchasing managers’ index], the near-term outlook for the sector improved,” Saxo Bank analyst Ole Hansen said.
By Friday on the London Metal Exchange, copper for delivery in three months eased to US$6,720 a tonne from US$6,724 a week earlier. Three-month aluminum rose to US$2,031.50 a tonne from US$1,971, while three-month lead inched down to US$2,014 a tonne from US$2,015.
Three-month nickel rose to US$15,768 a tonne from US$15,174.
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