Copper for December settlement on the Comex division of the New York Mercantile Exchange fell 2.25 cents or 0.8% to $2.9465 per oz. Earlier, the contract hit $2.92, the lowest since August 17.
Yesterday, the Federal Open Market Committee (FOMC) decided to leave rates unchanged – as was widely expected – but hawkish language from the central bank sent the dollar higher as it hinted at another rate increase this year.
At the beginning of the year, the policy board expressed a target of three rate rises and December is now seen as the most likely period for lifting rates again.
“The dollar strengthened on account of a more hawkish interpretation of the statement and the subsequent Yellen press conference, pressuring the precious group sharply lower, although both energy, base metals and US equity markets seem to withstand the blowback and hung on to decent gains going into yesterday’s close,” INTL FCStone analyst Edward Meir said.
“However, all three groups are under varying degrees of pressure today,” Meir added.
Meanwhile in the precious metals space, Comex gold for December delivery tumbled $20.30 or 1.5% to $1,296.10 per oz.
Currency moves and data releases
- “The more hawkish Fed stance, with FOMC saying it would start reducing its balance sheet from October has given the dollar a boost, with the dollar index rising to 92.55 – we wait to see if that is enough to turn the trend in the dollar, or whether the downward trend will continue to dominate,” Metal Bulletin’s Adams said.
- In other commodities, the Texas light sweet crude oil spot price was down 0.55% to $50.14 per barrel.
- Here in the USA, HPI in July ticked up 0.2% from last month, below the forecast of 0.4%. Weekly unemployment claims came in at 259,000, an improvement over the previous figure of 284,000. Finally, the Philly Fed manufacturing index in September was 23.8, better than the expectations of 17.3
- In addition, ECB president Mario Draghi is speaking.