Tags: commodity | gold | oil | copper | grain

Commodity Prices Dive as Stimulus Hopes Fade

Wednesday, 04 April 2012 05:15 PM

Commodities fell across the board on Wednesday, with a surge in U.S. crude stockpiles pressuring oil and as investors worried about the demand outlook for raw materials if there is no U.S. monetary stimulus this year.

U.S. gold, copper and wheat futures tumbled about 3 percent each, a day after the Federal Reserve released minutes of its March meeting that give investors less hope that the Fed would embark on a new round of government bond buying.

The dashed expectations for a third round of quantitative easing -- or QE3 -- pushed the dollar to a three-week high against the euro, weighing on commodities priced in the U.S. currency.

"What we're seeing this morning is the aftermath of the release of the Fed minutes tempering hopes of a QE for now, pushing the dollar stronger and oil down," said Olivier Jakob at energy consultants Petromatrix.

Oil prices fell more than 2 percent after the U.S. Energy Information Administration shocked investors with data showing U.S. crude stockpiles at nine-month highs. London's Brent crude oil ended at $122.34 a barrel, down $2.52 for its biggest decline in a month.

The 19-commodity Thomson Reuters-Jefferies CRB index settled down nearly 2 percent, for its largest one-day drop since Dec. 15.

Gold was among the biggest losers on the CRB. The most-active U.S. futures contract for gold, June, settled down $57.90 at $1,641.10 an ounce. It also touched a three-month low at $1,613.

Benchmark copper futures in London sank $265 -- its most in nearly two months -- to close at $8,350 a tonne.

Forecasts for good crop weather in the U.S. Plains added to the drag on agricultural markets, particularly wheat. Front-month wheat in Chicago trade finished down 18-3/4 cents at $6.39-1/4 a bushel.

© 2018 Thomson/Reuters. All rights reserved.

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Wednesday, 04 April 2012 05:15 PM
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