Commodity markets mixed while dollar surges

Commodities markets were mixed in the US on Tuesday morning, with a strengthening dollar capping any upside potential.

Gold for June delivery on the Comex division of the New York Mercantile Exchange fell $13.0 or one percent to $1,238.50 per ounce. Earlier, it fell as low as $1,238.10, its cheapest since April 27.

“Gold has found decent support ahead of $1,240 in recent days; however, more hawkish rhetoric from the Fed continues to create downside pressure, with gold somewhat vulnerable,” FastMarkets analyst James Moore said.

Comex copper for July settlement gained 1.9 cents or 0.9 percent to $2.0740 per pound. Trade has ranged from $2.0490 to $2.0785 fso far

“As the markets approach the summer months it is hard to see how prices will recover without major fundamental news,” Kingdom Futures’ Malcolm Freeman said.

Commodity market participants have been dealing with the residual pressure from the hawkish Federal Open Market Committee (FOMC) April meeting minutes that were released last Wednesday.

Market participants currently see a 30-percent chance of a June rise in US interest rates, with 58 percent expecting it in July, according to CME Group FedWatch.

Despite easing fears of a global slowdown, the prospects of a near-term rate rise have lifted the dollar and again put the base and precious metals under pressure.

Throughout the week, investors will pay close attention to various Fed official speeches but the greater focus will be on Fed chair Janet Yellen, who is scheduled to speak at Harvard on Friday along with former chairman Ben Bernanke.

In the interim, the US dollar index rose to 95.45 – around its highest since late March. The index has now gained in 11 of the last 16 sessions.

In data today, US new home sales and the Richmond manufacturing index are slated for release later today.

Turning to international markets, Germany’s DAX and France’s CAC-40 were up 1.4 percent and 1.6 percent respectively while the dollar climbed 0.5 percent to 1.1166 against the euro, its strongest since mid-March.

As for other precious metals, Comex silver for July settlement slipped 12.3 cents or 0.8 percent to $16.300 per ounce. Trade has ranged from $16.250 to $16.430.

Platinum for July delivery dipped $5.30 or 0.5 percent to $1,007.80 per ounce while palladium at $545.95 was down $4.30 or 0.8 percent.

(Editing by Mark Shaw)