|08-26-2014, 02:27 PM||#1|
Commodities pressured by strong dollar in afternoon trade
Gold steadied as well as crude oil prices Monday afternoon, weighed by the strength of the US dollar on the back of hawkish comments by Federal Reserve Chief Janet Yellen at the Jackson Hole Conference on Friday.
The commodity market saw a subdued trade in the late hours of trade in Europe, with gold prices hovering near its lowest in two months on firmer dollar and talks of an eventual increase in US interest rates.
Speaking at the Fed’s annual symposium on Friday, Yellen kept her options open urging the hawks to look beyond just the unemployment rate, which has been coming down, but conceded that rates could go up sooner than expected and faster than expected should the jobs market and inflation pick up steam.
As of 09:06 a.m. ET, Spot Gold was down 0.11% at $1,277.70 an ounce. Among other precious metals:
- Spot Silver was down 0.20% at $19.40 an ounce
- Spot Platinum was down 0.07% at $1,417.75 an ounce
- Spot Palladium was up 0.61% at $882.95 an ounce
Pressure was still evident on the dollar-denominated commodities as the greenback firmed against a six-currency basket near the highest level in almost a year.
More, the dollar was supported by the surprise dovish comments by European Central Bank President Mario Draghi, who said the bank is ready to provide more easing to help a waning recovery, signaling a withdrawal from the austerity-focused philosophy that has dominated economic policy-making in the euro area since the financial crisis.
As of 16:18 GMT+3, the USDIX firmed slightly below 82.58, the lowest level in 11 months.
On the energy markets, oil futures were still subdued by the firm dollar amid increasing global supplies, despite lingering geopolitical tensions in Ukraine, Libya and Iraq.
Brent held near a 14-month low with ongoing uncertainty about the crisis in Ukraine, following news that Russia has, technically at least, invaded embattled country with its humanitarian convoy.
In Libya, geopolitical unrest escalated over the weekend amid deadly fighting in the capital that destroyed the Tripoli airport during the weekend, but absence of supply disruptions given that the country loaded a second tanker at its largest oil port in Es Sider kept the prices afloat.
As for Iraqi oil exports, holding at record levels despite the ongoing offensive by ISIS (Islamic State in Iraq and the Levant) against civilians in the north of the country.
- West Texas Intermediate for October delivery rose 0.02% to $93.67 a barrel.
- Brent for delivery in October rose 0.18% to $102.47 a barrel on the ICE Exchange in London
Oil prices might see further corrections during the US session, following a four-hour halt of the futures trade on the the Chicago Mercantile Exchange (CME) due to technical issues.
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