Weekly Round-Up: Declines Across the Board on Fed, China Data, Emerging Market Turmoil

Following an overnight drop of 2 percent, spot gold is up 0.4 percent, or $4.99, at $1,248.30 per ounce. Similarly, US gold futures for February delivery are up 0.5 percent, or $6.25, at $1,248.50.
Despite those gains, gold is still on track for its first weekly fall in six weeks, as per Reuters. That’s largely because the yellow metal has been faced with factors such as strong economic growth in the US, a stimulus cut from the Federal Reserve and low Chinese demand.
“You have strength of the dollar against emerging markets currencies, and that’s negative for gold,” Peter Fertig, owner of Quantitative Commodity Research, told Reuters. “But what is also important is the negative correlation between stock markets, especially the U.S. ones, and gold and the weakness in emerging markets. Fears that it may lead to widespread crisis are currently sending shivers through the stock markets.”
Silver, also on course for a large weekly drop, is currently up 0.4 percent, or $0.08, at $19.20 an ounce, Reuters also said.
Meanwhile, three-month copper on the London Metal Exchange is down 0.42 percent, or $29.67, at $7,065.25, another Reuters article states. The red metal is also down on New York’s COMEX exchange, having sunk $0.0215, or 0.7 percent, to $3.2656 per pound, according to The Wall Street Journal.
Weakness in China’s manufacturing sector is part of what has pushed copper prices down. The metal’s industrial applications make it particularly sensitive to shifts in manufacturing and industrial data. The health of emerging markets also has a major impact on copper prices, and political turmoil in many countries is currently giving investors pause.
“What you’re seeing right now is a move out of commodities that are tied to growth in emerging markets, and copper is one of them,” Adam Klopfenstein, a senior market strategist with Archer Financial Services, told The Wall Street Journal.
Finally, Brent crude is down $1.01, to $106.93 per barrel. That puts the fuel on track for its first monthly fall since September, Reuters notes. Similar to the other commodities discussed, worries about emerging markets and the Fed’s stimulus cut are weighing heavily on the oil market. Data showing China’s fuel consumption rose at its slowest rate in 20 years in 2013 is also negatively impacting oil.
 
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