Commodities: Oil futures mixed, gold dips post FOMC statement

Gold futures were in negative territory on Thursday, after the US Federal Reserve decided to keep interest rates unchanged overnight at 0.25%, as expected by analysts, but left the door open to an increase in December.

The US central bank downplayed global economic headwinds in its statement on the policy decision, saying that it was monitoring developments abroad. The comment dented confidence in the precious metals market. At 1603 GMT, COMEX gold futures contract was down 2.31% or $27.20 at $1,148.90 an ounce, while spot gold was 0.54% or $6.30 lower at $1,149.80 an ounce.

COMEX silver fell 4.38% or 71 cents to $15.58 an ounce, while spot platinum was 0.87% or $9.69 down at $992.15 an ounce. Meanwhile, base metals futures conveyed a mixed picture on the London Metal Exchange.

Past the midway point of trading, three-month delivery contracts of primary aluminium (up 0.3%) and nickel (up 0.8%) were up, while copper (down 0.4%), lead (down 1.0%), tin (down 1.8%), and zinc (down 1.4%) were all trading lower. Spot iron ore prices headed back below $50 per tonne overnight as demand for the steelmaking raw material from Chinese mills continued to fall.

Crude oil prices fluctuated throughout the European session, after rising overnight on declining US inventories over the previous session. The Brent front-month futures contract for December delivery was up 0.04% or eight cents at $49.06 per barrel while WTI was up 0.39% or 18 cents at $46.12 per barrel, with both benchmarks slipping into negative territory early in the Asian session.

Jesper Dannesboe, commodities analyst at Societe Generale, said, “WTI’s false break below $45 and the strong pace of the reversal pushed implied volumes higher across maturities for both WTI and Brent.

“We still consider implied volumes for call options to be too expensive given our view that WTI will find it difficult to sustain any ralliesabove $50 until around mid-2016 because the global oil market remains severely oversupplied and WTI prices need to stay below $50 most of time until mid-2016 in order to ensure that US oil production continues to decline.”

Finally, headline agricultural commodities futures were in a mixed patch. CBOT corn (up 0.86%), wheat (up 1.58%) and ICE cocoa (up 0.19%) contracts were trading up, while ICE cotton (down 0.57%) and CME live cattle (down 0.63%) futures fell.