Gold fell to the lowest in six months on Wednesday and sliver slid to a year low as the US dollar continued to rise on expectations of a sooner than expected boost to key interest rates to control persistently high inflation.
Wall Street rose for most of the session, but lost ground late in the session and the Nasdaq ended in the red.
US bond yields eased though, down more than 3 points to just over 1.52%, around the level three months ago as investors prepared for a rate rise in 2022 instead of 2023.
Comex gold for December delivery settled down $US14.60 to $US1,722.90 per ounce, the lowest since March 31. Comex silver tumbled more than 4% to $21.50 while Comex copper was off 1.6% at just over $US4.17 a pound.
US crude futures weakened to just under $US75 a barrel and Brent also fell under $US79 a barrel, retreating from the three year high above $US80 a barrel earlier in the week.
Iron ore rose with the MB Fastmarkets index price for 62% Fe fines from the Pilbara up 2% to $US114.13 a tonne, going against the trend. Coking coal prices again rose in the Chinese market to $US593 a tonne for premium hard coking coal of the sort normally imported from BHP in Queensland.
But Chinese mills have been banned from buying this coal. Premium hard coking coal from Australia in the Asian markets has been reported for selling for just under $US400 a tonne.
Newcastle priced thermal coal hit an all time high of $US212 a tonne on Wednesday, according to the ICE futures market.
That’s a rise of 20% in September alone and 160% or more in the past year and is due to the shortage of coal in China, rising demand for electricity, and the ban on Australian coal imports.
Gold and silver’s fall on Wednesday came as the greenback again firmed. The ICE US dollar index was last seen up 0.6 to 94.37 points, a one-year high.
The fall in gold and sliver prices though will test the punter’s resolve on the ASX where they bid up the prices of leading local miners on Wednesday, despite the weakness in gold futures through the session (and after falls earlier in the week).
The punters reckoned that some local miners could be candidates for takeover activity from each other or abroad after two Canadian giants, Agnico Eagle and Kirkland Lake Gold (KLG) announced an all paper merger to produce the third largest non-government owned miner in the world.
After some initial weakness on Tuesday, the share prices of both companies ended higher on Wednesday. Agnico Eagle shares rose 3.4% in Canada and Kirkland Lake shares were up 2% as investors realised the slide in gold prices during Wednesday made the terms look better.
And the proposed merger got a tick from ratings agency, Moody’s which said the all share deal was credit positive.
Moody’s said the merger will benefit Agnico by offering greater diversity by bringing in low-cost mines, incremental production, and a strengthened ability to generate free cash flow, which the company can use to fund growth projects.
The merger also maintains Agnico’s “strong geopolitical profile, adding KLG’s assets in Canada and Australia to its existing operating mines in Canada, Mexico, and Finland,” Moody’s said in a note.
