Commodities: Oil benchmarks shed gains, gold and base metals slide further

Oil benchmarks returned to negative territory on Monday, while gold and base metal futures slid further down as the wider commodities market continued to grapple with weak fundamentals and lacklustre demand from China.

At 1527 BST, the Brent front month futures contract for November delivery was down 1.56% or 76 cents at $47.84 per barrel. Concurrently, the WTI was down 1.25% or 57 cents to $45.13 per barrel.

With end of the third quarter approaching, Kash Kamal, senior analyst at Sucden Financial said: “Global crude prices experienced a rather uneventful September as both front month Brent and WTI futures spent the majority of the month trading sideways as apprehension ahead of this month’s FOMC meeting, which turned out to be a damp squib, and lacklustre fundamentals saw many investors stay on the sidelines.”

Precious metals were firmly in the red, extending Friday’s declines after the US Federal Reserve Chairwoman Janet Yellen raised expectations of an interest rate rise at some point over the remainder of this year.

COMEX gold for December delivery was down 1.05% or $12.00 at $1,133.60 an ounce, while spot gold was 0.89% or $11.65 lower at $1,134.55 an ounce.

The market is still reeling from the Swiss anti-trust investigation into potential collusion between major banks on the gold market, announced earlier in the session. The watchdog is currently looking into UBS, Julius Baer, Deutsche Bank, HSBC, Barclays, Morgan Stanley and Mitsui dealings and whether banks conspired to set bid/ask spreads.

Away from gold markets, COMEX silver was down 3.58% or 54 cents to $14.57 an ounce, while spot platinum was 2.74% or $25.95 lower at $920.60 an ounce, as the dollar sent emerging market and commodities exporters’ currencies tumbling for yet another session in Asia.

Meanwhile, base metal futures fell further on the London Metal Exchange extending the past week’s declines well into the European session on Monday. Past the midway point of trading, LME’s three-month delivery contracts of primary aluminium (down 1.8%), copper (down 2.5%), lead (down 1.6%), tin (broadly flat) and zinc (down 1.9%) were trading lower.

Copper prices are likely to come under further pressure with demand growth in general and China’s particular seen to be pulling back, say analysts at SP Angel.

Only nickel (up 0.3%) avoided the drop for a second successive session, with fundamentals expected to improve on a decline in the growth of Chinese nickel pig iron production and perceptions of underinvestment.

Finally, agricultural commodities futures were largely in negative territory. CBOT corn (down 0.58%), wheat (down 0.84%), ICE cocoa (down 1.37%) futures were trading lower, with the latter feeling the heat from oversupply permutations. However, CME live cattle (up 0.15%) and ICE cotton (up 0.13%) futures were clinging on to positive territory.