Commodities: Gold continues sell-off after Fed hints at interest rate hike, greenback softer
Wednesday saw the US Fed announce a reduction in their $4.5 trillion balance sheet in October and hint of another rate increase this year.
Spot gold was down almost 1% on the news and continued the sell-off in Thursday's trading, down 0.58% to $1,293/Oz. with the December contract 1.5% lower to $1,297/Oz..
The precious metal is highly sensitive to rising US rates, which boosts the cost of holding non-yielding bullion relative to other assets, while lifting the dollar, in which it is priced.
"It should be an interesting time in the run up to mid-December as we see the Fed prepare to raise rates, reduce the balance sheet at the same time as a tense negotiation over the (U.S.) debt ceiling, plus fiscal spending plans and tax cuts are debated in Congress," Mitsubishi analyst Jonathan Butler said.
Speaking about the gold price, Frank Schallenberger at LBBW said, "We will head down to $1,250 in the next couple of weeks, and then we'll think again (once) people have digested the news on interest rates."
In other precious metals, silver was down 0.93% to $17.02/Oz., platinum was 0.77% lower at $938/Oz., and palladium was 0.38% softer at $914/Oz..
Copper continued it's Wednesday fall to trade 1.28% lower on Thursday to $6,447/ tonne.
In it's latest client note, UniCredit said about copper, "LME (London Metal Exchange) stocks have rapidly jumped by around 100,000 tonnes once more, seemingly helping to compound the corrective tone in prices. For a year now we have become used to seeing additions on this scale only for the material to be withdrawn in the subsequent weeks/months. But arguably the key thing here is that there has been no overall net increase in stocks over the period that these see-saw trends have been in place."
About the latest price action they said, "As for prices, the correction seems to be finding support at about $6,500/tonne. The quarter-to-date average is running at $6,333/tonne, versus our Q3 forecast of $6,330/tonne".
Oil prices were largely steady, with WTI for January delivery down 0.19% to $51.22/ barrel while the benchmark brent crude January contract traded 0.15% higher to $55.78/barrel.
Traders will await the latest Organisation of the Petroleum Exporting Countries) OPEC meeting on Friday where discussions about a possible extension of the current deal to cut output by 1.8 mill barrels per day (bpd) are anticipated to be discussed.
"The bull run in the oil market is running out of steam as unease builds ahead of tomorrow's OPEC/non-OPEC meeting," said Stephen Brennock, analyst at London brokerage PVM Oil Associates.
Soybean futures for November were 0.16% firmer to $9.73/bushel, supported by a larger-than-expected weekly export sales tally. The US Department of Agriculture (USDA) reported export sales of U.S. soybeans in the latest week at more than 2.3 million tonnes, topping a range of trade estimates for 1.2 million to 1.5 million.
In other agriculturals, corn was 0.03% higher to $3.50/bushel, while New York cotton for December delivery was down 1.46% to $0.6839/lb.