Commodities take a hit on stronger dollar and falling demand
16 Aug 2018
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Metal markets across the globe have been hammered by a rising dollar, a falling Turkish currency and fears that a run on China’s economy by US imposed punitive tariffs combined to pull down commodity demand and retard global economic growth.
Copper prices edged lower and crude oil fell to its lowest level in almost eight weeks on the New York markets, while safe haven gold tumbled to the lowest since January 2017.
Most contracts in base metal markets fell more than 2 per cent on the London Metal Exchange, with copper sinking below $6,000 as supply concerns eased.
The Bloomberg Commodity Index, a combination of commodities, including, oil and metals to live cattle, plunged to a one-year low.
In the precious metals market, gold tumbled to the lowest since January 2017, hit by a strong dollar and prospects for rising borrowing costs in the US, while silver too was headed for the biggest loss since at least 1950, while platinum and palladium were in a free-fall.
The fall in crude prices has been partly aided by a rise in US inventories with the benchmark West Texas Intermediate crude for September delivery falling $2.47 to $64.57 a barrel on the New York Mercantile Exchange.
The market sell-off hit currency markets across the world. Indonesia’s central bank hiked interest rates on Wednesday to contain volatility and curb a slide in its currency. The Chinese yuan weakened as recent data showed the economy in a rough patch.
While agricultural commodities have been relatively insulated from the Turkish crisis in recent days, crop prices fell on Wednesday, mainly due to the US-China trade dispute. Cocoa erased earlier gains in New York trading while cotton extended losses.
Commodities have been battered for months by worsening trade tensions between China and the US, the world’s two largest economies.
.webp)
