Commodity News: Gold & Oil Prices Continue To Fall
Commodity News
Gold prices have been trading around 5-year lows in recent months due to the pending interest rate hike from the Federal Reserve. With the coming interest rate hike viewed as more likely to happen during the current year, prices fell 6.5% in July, the largest monthly decline in more than two years. The precious commodity hit a new 5-year low on Thursday before slightly rebounding on Friday, and the commodity could still fall further.
Gold and other commodities that are price in the US dollar are likely to continue trading lower as the currency strengthens. The pending interest rate hike makes gold less attractive compared to bonds which will offer higher rates of return. Further, the commodity becomes more expensive for holders of other currencies as the value of the dollar increases. With demand for physical gold in markets like China also decreasing, prices could move further down moving forward.
Oil prices also fell to new multi-month lows on Friday as the US oil rig count increased even as the worldwide supply glut persists. OPEC production has also remained higher than expected, and comments from the group have led to speculation that they will continue to not cut supply. Brent and US crude oil prices had their biggest drop last month since December, as it appears that oil suppliers are maintaining their production levels amid falling prices and will have a record average surplus of 1.5 million barrels a day entering into 2016.
