Fed Spooks Goldbugs
While the overnight ASX futures market has the local market opening a touch stronger later this morning, watch for a big sell-off in gold stocks and iron ore stocks after the prices of both commodities plunged overnight.
Gold slumped overnight Thursday in the wake of the US Fed’s decision to start shrinking its balance sheet and hints of up to four interest rates by the end of 2018 while iron ore prices plunged 5% to levels not seen since early July.
In New York Comex gold prices dropped sharply, settling below $US1,300 for the first time in September after the US Federal Reserve hinted that interest rates will go up in December.
Gold for December delivery slid $US21.60, or 1.6%, to settle at $US1,294.80 an ounce - its lowest settlement since August 24.
The price continued to weaken into early Asian trading Friday morning, down around $US1,294 an ounce
In other metals trading, Comex December silver also slid, dropping by 31.6 cents, or 1.8%, to $US17.018 an ounce.
Comex December copper settled at $US2.935 a pound, down 1.2%.
And the Metal Bulletin’s key iron ore price (for ore with a 62% Fe Iron Ore content delivered to Qingdao in northern China) fell $US3.56 a tonne, or 5.1% to end at $US66.09.
The metal Bulletin reported some sales into China on Thursday under $US65 a tonne, hinting at further falls today.
The price had risen 1.2% on Wednesday after a 4% slide on Thursday. Yesterday it fell sharply taking the fall so far in the past couple of weeks to more than 15% and close to 18% in the past month.
Glenn Dyer has been a finance journalist and TV producer for more than 40 years. He has worked at Maxwell Newton Publications, Queensland Newspapers, AAP, The Australian Financial Review, The Nine Network and Crikey.
At the AFR he was a finance writer, Finance Editor, News Editor and Chief of Staff. At the Nine Network he was supervising producer of Business Sunday for more than 16 years. He has also written for other online and analogue print publications here and overseas.