Crude, gold & copper drop
A fourth round of easing measures announced by the US Federal Reserve failed to lift the commodity markets on Thursday, as underlying concerns about a supply glut and a budget crisis in the world’s largest economy restrained the bulls. Key commodities, including brent crude oil, gold and copper, dropped from Wednesday’s levels as investors remained concerned the Fed’s decision to link its monetary policy to unemployment and inflation figures could limit the length of its intervention.
The Thomson Reuters/ Jefferies CRB Index, which tracks the price movement of 19 commodities, went up 0.5% on Wednesday to 295.19 after responding to the Fed announcement, but again retreated on Thursday and remained flat at Tuesday’s level.
The Fed said late on Wednesday it planned to buy $45 billion in longer-term treasuries every month on top of its $40 billion monthly purchase of mortgage-backed securities as expected, but set unemployment and inflation thresholds for its exit strategy.
Moreover, failure to reach a solution on the US fiscal cliff — $600 billion worth spending cuts and tax hikes that are set to kick in early 2013 that economists say could push the US back to recession — spooked investors, especially when the recovery in Chinese economy seems fragile as of now.
Brent crude dropped 35 cents to $109.15 a barrel in intraday trade on Thursday, while US crude tumbled 39 cents to $86.38. In Vienna, OPEC oil ministers agreed to retain its 30-million barrel-a-day output
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