Major commodity prices slumped Wednesday across the board — all except for copper and iron ore — as the realities of US monetary policy hit home.
Traders and analysts had a few hours overnight to consider the implications of comments Tuesday from Fed Chair Jay Powell about US interest rates, and finally worked out that while he didn’t really clarify anything, the betting moved to fewer or even no rate cuts this year.
Gold, oil, and silver all slumped — gold by more than $US20 an ounce, while oil lost more than 3%. Silver just edged lower, but copper was up 1%.
Shares fell sharply in a similar cleanout of the bulls as we saw in gold and oil.
US bond yields dipped back under 4.60%, and the US dollar fell (after its strong run-up), with the Aussie dollar moving off the 64 US cent level to trade a touch stronger in early Asian dealings Thursday.
Helping push commodities lower was, in the case of oil, the fourth rise in oil stocks in a row (that’s reality hitting home), and gold because it was overbought, and the bulls needed tidying up.
Iron ore futures hit a seven-week high in Singapore and a five-week high in China, helped by an improving steel market and profit margins in China.
The most-traded September iron ore contract on China’s Dalian Commodity Exchange ended daytime trade 4.25% higher at 870 yuan ($US120.20) a tonne, the highest since March 11. It fell more than 1% on Tuesday.
And the SGX price leapt nearly 6% to end at $US115.85, the highest price for nearly 8 weeks.
