SC: Commodities: Early gains reversed as dollar rebounds
LONDON (SHARECAST) - The price of oil for December briefly rose back above $70 a barrel in New York trading before profit-takers moved in smartly. By the close, the futures contract was trading $1.54 lower at $65.96, giving back some of Wednesday’s $4 gain.
With the Federal Reserve’s key lending rate now down to 1%, traders realised that the Fed has little further room to manoeuvre in terms of rate cuts, and other initiatives will be needed if the economy – and thus demand for oil – is to be revived.
Thursday’s US Gross Domestic Product (GDP) data, though better than expected, underlined the sickly nature of the US economy as third quarter GDP fell at an annual rate of 0.3%, the worst decline since the third quarter of 2001.
Metal prices were also in retreat, with gold for December delivery shedding $15.50 to $738.50 on the New York Mercantile Exchange.
The yellow metal’s appeal was diminished by a rise in the value of the US dollar, which checked an early advance in the gold price to $778.30.
Copper and silver prices also fell back, with the former sliding by almost one-tenth to $1.8905 a pound.
