Commodities: Latest FOMC minutes reignite buying in gold

Wednesday saw a weaker dollar on the back of the latest release from the FOMC (Federal Open Market Committee), after members dampened any rate hike expectations for this year, as "many" rate-setters see sub 2% inflation persisting longer than expected.

As can be expected from a weaker greenback, gold was one of the main beneficiaries with the COMEX December contract for gold climbing 1% to $1,288.50/oz., shaking off two days of losses in the process .

The yellow metal had rallied recently after a war of words between US President Donald Trump and North Korea over Pyongyang's nuclear missile threats against the Pacific US territory of Guam, but then died down over the last 48 hours with Trump praising Kim Jong Un on Wednesday for a "wise" decision not to make good on their threats. George Gero at RBC Wealth Management said, "So far we have not seen any positive changes in worries with Russia, North Korea, Venezuela and more political headlines may be coming to support gold prices."

In other precious metals, spot silver added 2.38% to trade at $17.10/Oz. as at 1900 BST with October platinum up 0.62% to $984.50 and palladium for September delivery up 2.69% to $914.28 with the latter trading at close to 3 year highs.

Wednesday's session also saw the oil market drop further, with both Brent and US WTI crude futures falling, by 1.99% to $46.85 a barrel and 1.45% to $50.39 respectively, which came despite a reduction in crude oil inventories of 8.9m barrels, marking the seventh consectutive weekly drop, as per the latest DoE figures.

Noting the seasonal demand peaks in the US, Matt Smith at ClipperData said, "The peak of summer driving season has now passed, and demand for crude should wane also as refinery runs drop. Gasoline demand will ebb as summer road trips are mostly over and children head back to school."

OPEC and other major producers including Russia have agreed to limit output recently, but face a somewhat uphill battle in the face of souring US production, up almost 12% since mid 2016.

Base metals saw copper up 2.6% to $6,557 a metric tonne and iron ore up 4.35% to $55.50, both helped by the softer dollar, with the red metal atop possible technical support in the $6,505 area. A seasonal slowdown in China coupled with profit taking after spot copper saw two-year highs recently have been cited as reasons for a slight sell-off, but the current weakness in the dollar has helped keep the offers from playing on the price too much.

On the agricultural front, soybean futures for November were slightly firmer on Wednesday, up 2.25% to $9.26 a bushel according to official CBOT (Chicago Board of Trade) data. A delegation of importers from China signed agreements to buy 3.8m tonnes of US soybeans valued at about $1.56bn, the US Soybean Export Council said.

CBOT corn futures hit their lowest in a month as good weather forecasts for crop developments in the US Midwest added pressure to the September contract, down 1.54% on the day to $3.51.