Commodities: Dollar strength pushes precious metals sharply lower

Strength in the greenback piled pressure on commodities, especially in the precious metals space.

In remarks prepared for a speech, the president of the Federal Reserve bank of Richmond, Jeffrey Lacker, argued in favour of ‘pre-emptive’ interest rate increases Stateside.

On the basis of past economic relationships, current levels of inflation and unemployment were consistent with a Fed funds rate at 1.5% or above, Lacker said, versus the then current range of between 0.25% and 0.50%.

His remarks led to a sharp sell-off in gold futures, with the December 2016 COMEX-traded gold contract trading down by 3.08% to $1,272.30 an ounce.

In parallel, similarly-dated silver futures on the same exchange were losing 5.40% to change hands at $17.85/oz..

As of 1952 BST, the US dollar index was higher by 0.45% to 96.129 and the Bloomberg Commodity index could be seen down 0.54% at 85.14.

Losses among bulk metals were more restrained, with three-month LME copper futures off by 0.2% to $4,816 a metric tonne by the closing bell.

Crude oil futures were also under pressure, with the November 2016 West Texas Intermediate contract down by 0.45% to $48.59 per barrel.

NYMEX Natural gas futures on the other hand were gaining 1.51% to $2.97/MMBtu and RBOB gasoline was up by 1.97% to $1.4994 a gallon.

Soft commodities were also well-bid, with December 2016 corn futures rising by 0.65% to $3.4825 per bushel on the Chicago Board of Trade.

Live cattle futures were the best performer in that corner of the market, jumping 2.70% to $1.0268 a pound.

Cocoa futures on Euronext LIFFE also did well, clocking in with an advance of 1.2% to £2,295.00 per tonne.