Commodities: Metal and oil prices slide as dollar strengthens

Metal and oil prices were under pressure on Friday as the dollar strengthened and as rate cuts by China’s central bank failed to calm concerns about the country’s economic slowdown.

The People’s Bank of China said it will cut its one-year deposit rate and one-year lending rate by 25 basis points each to 1.5% and 4.35%, respectively.

The PBOC also cut the reverse requirement ratio for all banks by 50 basis points to 17.5%, with an extra 50 bps reduction for some lenders.

“These moves come after clear signs of weakness in the economy in recent months. Amid continued capital outflow and falling CPI inflation, we believe these cuts may be necessary to prevent a tightening of financial conditions,” said Goldman Sachs.

Figures released on Monday by China’s National Bureau of Statistic showed gross domestic product rose 6.9% in the third quarter compared with 7% in the first two quarters.

Meanwhile, the dollar strengthened against the euro after the European Central Bank hinted at further stimulus in December.

"Strong ECB easing in December also limits the chances the Fed will hike at the same time, pushing a lift-off further into 2016,” said RBS analysts.

In afternoon trade on the Comex gold was down 0.31%, silver dropped 36%, platinum dipped 0.51% and copper fell 1.30%.

Song Xin, general manager of China National Gold Group Corp., said gold prices are expected to remain at low levels for the next few years. "The economic uncertainties in both China and other parts of the world will also intensify price fluctuation in the gold sector," Song added. "Gold companies need to adapt to the low-price environment for years to come.

Going the other way, three-month futures contracts on base metals on the London Metal Exchange were higher including copper (+0.3%), lead (+0.4%), nickel (1.3%), tin (+0.2%) and zinc (+1.1%). Although primary aluminium was flat.

Oil prices slumped with Brent crude down 0.37% to $47.90 per barrel and West Texas Intermediate down 1.3% to $44.76 per barrel at 1614 BST.

Agricultural commodities were mostly in the red including CBOT corn (-0.73%), wheat (-0.76%), ICE cocoa (-0.99%), cotton (+0.06%) and CME live cattle (-1.04%).