Commodities: Crude oil, iron ore futures retreat ahead of Fed meeting

Commodities were unloved on Tuesday as risk aversion set in ahead of the US central bank policy meeting on the next day and after a negative market reaction to the latest decision and outlook from Japan's rate-setters.

Prices for precious metals retreated ahead of the result of the Fed meeting, despite a steady US dollar and risk-off moves in Japanese and UK markets.

Gold futures for April delivery lost 0.85% to $1,234.50 per troy ounce on COMEX and those for silver by 1.39% to $15.31.

Traders apparently shrugged off hints from Bank of Japan Governor Haruhiko Kuroda that further monetary stimulus – possibly including further cuts to already negative interest rates - was possible given the now more downbeat economic outlook.

Three-month copper futures slid just 0.3% by the close of trading to $4,933.00 per metric tonne on the LME.

Iron ore futures fared far worse, dropping 4.8% by the close of trading to $63.47 a tonne on the Dalian Commodities Exchange after hitting their best level since January in the previous session.

Data released on 12 March revealed that Chinese crude steel output fell by 5.7% year-on-year in the first two months of 2016.

Weakness was also apparent in the LME-traded three-month contracts for aluminium, down 1.3% to $1,523 per tonne, and nickel which ended the session down by 0.3% to $8,612.50 per tonne.

Out in the energy space, front month Brent crude futures retreated by 1.96% to $38.78 per barrel on the ICE.
West Texas Intermediate was off by 2.0% to $36.45 per barrel.

Natural gas futures for delivery in April gained 1.70% to $1.85/MMBtu.

Agricultural commodities were mostly in the end on Tuesday, albeit only slightly so, save for the May 2016 cotton contract, which had surrendered 0.91% to $3,053 per metric tonne on the ICE.