Well, the US Federal Reserve has certainly left markets dazed and very confused.
Equities went agggh, bonds went ’the sky is falling in", and commodities couldn’t make their mind up.
So gold and metals rose, but oil eased.
Gold’s bounce was understandable – more cheap sugar to finance the punters’s obsession with the metal, even though the Fed seems to be implying that inflation is as far away as ever from being a problem for markets to contend with.
In fact the Fed’s message was one of concern about global markets, but these fears have been held elsewhere for longer, and up to this week, had seen gold sold off.
While punters were hoping into gold, more savvy investors were backing into cash and into bonds with US bond yields dropping sharply for a second day.
Now gold has bounced, the bugs are out of the caves cheering.
So Comex gold futures continued to run higher in the wake of the Fed’s decision not to lift rates the afternoon before.
Comex gold for December delivery jumped $US20.80, or 1.9%, to settle at $US1,137.80 an ounce.
That was the highest settlement since the start of this month. December silver rose, adding 17.9 cents, or 1.2%, to $US15.163 an ounce.
For the week, gold saw a 3.1% gain, while silver was up about 4.5% (it has better leverage).
And other metals rallied, with the exception of copper, which saw its December contract drop 6.6 cents, or 2.7%, to $US2.386 a pound on Comex, an understandable ending to the week seeing the Fed was really saying it is worried about the strength of global economic growth.
Copper was down just over 2% over the week.
But US oil futures Friday night saw their largest daily drop in almost three weeks in the wake of the Federal Reserve’s decision to leave its key interest rate unchanged.
Unlike gold buyers, oil investors were worried about the Fed’s underlying message about the world economy (especially China) – that global demand for oil is weak and if growth slows will get weaker.
And oil prices failed to find much support even after data released on Friday by Baker Hughes showed a third straight weekly fall in the number of US oil-drilling rigs actively in work.
October West Texas Intermediate crude futures fell $US2.22 a barrel and settled at $US44.68 a barrel, down 4.7%, in New York.
That ate up all but 0.1% of earlier gains over the previous few days.
In London, November Brent crude fell $US1.61, or 3.3%, to $US47.47 a barrel, down 3.2% for the week and a more accurate indicator of global demand.
Friday night’s Baker Hughes weekly report on rig use showed a third weekly fall (down 8 to 644 on Friday).
