Copper pushes higher, gold upside capped by rebounding dollar

Base and precious metals were little changed before Friday’s settlement, but overall both copper and gold hit fresh highs this week following the Federal Reserve’s decision to keep rates accommodative.

Copper for December delivery on the Comex division of the New York Mercantile Exchange ticked up 0.60 cents or 0.3 percent to $2.2005 per pound. Yesterday, the contract settled at the highest mark since August 10.

Comex gold for December settlement slid $4.40 or 0.3 percent to $1,340.30 per ounce. The precious metal saw its biggest weekly gain since June.

On Wednesday, the Fed confirmed what many observers believed when it decided to hold rates around 0.25-0.5 percent for at least another two months. Despite a healthy labour market and the headline unemployment figure below five percent, inflation is still lagging behind the Fed’s two percent target.

Nevertheless, three FOMC members – Esther George, Loretta Mester and Eric Rosengren – dissented from the statement, an unusually large number, which indicates that policy board is split.

In response, the dollar softened to a one-week low and ignited a broad-based commodities rally. But after two days of heavy buying, the greenback recovered and was last trading at 95.45 on the dollar index.

“Gold and silver are both in need of corrective balancing and traders need to be on the look-out for several Fed speeches today as precious metals and other commodities have already priced in a dovish Fed and some doubt on that subject today could exaggerate the initial corrective tilt,” The Hightower Report noted.

The US central bank is unlikely to raise rates ahead of the presidential election, which is only six weeks away, but market observers anticipate the Fed moving in December.

While in data today, the EU flash manufacturing PMI at 52.6 was better than expected but the flash services PMI undershot at 52.1. US flash manufacturing PMI for September came in at 51.4, below the forecast of 52.1 and the August figure of 52.0.

Turning to US markets, the Dow Jones industrial average and S&P were both down 0.5 percent, while the dollar softened 0.3 percent to $1.1238 against the euro.

In other commodities, light sweet crude (WTI) oil futures on the Nymex tumbled $1.86 or four percent to $44.46 per barrel, while the most active Comex silver contract stood at $19.695 per ounce, down 40.4 cents.

(Editing by Tom Jennemann)

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