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It was a rough week for commodities after the Fed said that the US economy has stabilized enough to scale back on economic stimulus.
Gold rose $16.83 June 21 to reach $1,294.76 an ounce from an earlier level of $1,268.89, which was the lowest price since September 2010. That is 7 percent below last Friday. Silver was similarly negatively affected by the Fed’s announcement to decrease its quantitative easing. It dropped to $19.35 an ounce during the week before recovering $0.04 to $19.92 an ounce today.
“Quantitative easing was massively stimulative for precious metals, and we are now seeing that process going into reverse,” Nic Brown, an analyst at global asset management firm Natixis, told Reuters.
Copper is also on a downward trend due to Bernanke’s announcement. According to Reuters, investors worry the end of federal bond-buying will hurt the housing industry, which is a huge source of demand for metals. In addition, concerns about the health of China’s economy are also pushing copper prices down.
After falling to $6,692 a tonne, its lowest level since October 2011, three-month copper on the London Metal Exchange ended at $6,810 a tonne.
Finally, crude oil futures dropped this week. By June 21, crude for August delivery lost 0.2 percent, decreasing $0.22 to $94.92 a barrel on the New York Mercantile Exchange. Earlier in the week, July crude had a steep fall of 2.9 percent, the biggest one-day drop in seven months, MarketWatch reported. Analysts at Citi Futures expect a “lack of tightness in the physical market” will continue to depress oil prices.