Wild commodities session ends with a whimper

Base and precious metals were little changed near the closing settlement with market volatility erupting after Federal Reserve chairwoman Janet Yellen raised the prospects of a near-term rate hike, but ultimately clearly say when the Fed would act.

Yellen argued that the rationale for another rate hike “has strengthened in recent months” during her speech in at the annual symposium in Jackson Hole, Wyoming.

In reaction, equities and commodities along with the dollar surged before ultimately settling near previous settlements – the dollar index was last trading at 95.41, the highest since August 15.

Copper for December settlement on the Comex division of the New York Mercantile Exchange was last down 0.05 cents or less than 0.1 percent to $2.0760 per pound. Trade has ranged from $2.0705 to $2.0995

Comex gold for December delivery declined 40 cents to $1,324.20 per ounce. The yellow metal jumped to a one-week high of $1,346.0 before retreating.

Preceding the speech, St. Louis President James Bullard said that the September meeting might be a good time to raise the Federal Funds rate.

“If we got to a meeting and we felt things were looking stronger, that might be a good time to do that,” Bullard said with an important caveat that the weak second-quarter GDP was below previous trends.

Despite Yellen’s hawkish comments, prediction markets do not expect the Fed to move in September and are only assessing a 42-percent chance that the Fed raises rates at all this year, according to CME Group FedWatch.

Yellen has been adamant that the Fed should raise rates at least twice this year and begin the extended process of normalising rates after beginning the move in December 2015.

In a jam-packed US data day, preliminary GDP quarter-over-quarter for the second quarter was in-line with forecasts at 1.1 percent expansion. Preliminary GDP price index over the same period expanded at 2.3 percent, a touch above the 2.2 percent forecast.

Goods trade balance for July stood at -59.3 billion, beating expectations of -62.3 billion. Later consumer sentiment and inflation expectations are set for release.

University of Michigan consumer sentiment for August once again disappointed with a 89.8 figure, below the economic consensus of 90.6 and previous reading of 90.4 Lastly, inflation expectations over the same period gained 2.5 percent, matching the July figure.

Turning to US markets, the Dow Jones industrial average and S&P were down 0.5 percent and 0.4 percent respectively, while the dollar gained 0.8 percent to $1.1207 against the euro.

As for other precious metals, Comex silver for September delivery rose 12.6 cents or 0.7 percent to $18.615 per ounce. Trade has ranged from $18.470 to $19.035.

Platinum for October settlement dipped $3.80 or 0.4 percent to $1,073.20 per ounce, while the most active palladium contract stood at $687.85 per ounce, up $2.85.

(Editing by Tom Jennemann)