Commodities were mostly lower in recent day trading activity with most sectors posting declines as a jump in borrowing costs for Italy, tighter credit in the commodities sector and a stronger dollar eroded investor confidence. Gold and oil pared losses with crude lifted by worries about Middle East tension.
While financial trading was thin because of the US Thanksgiving holiday, investors will be watching data for signs of an economic recovery in the United States, the world’s largest oil user, and any ratings cut for European nations. US new home sales for October and monthly home prices for September are due to be released.
The dollar rose to a seven-week high against the euro, and was also strong against a basket of currencies, weighing down on most commodities including the oil market. Oil, along with other dollar-denominated commodities, tends to be negatively correlated with the dollar as it becomes more expensive for holders of other currencies.
In agricultural markets, US grains fell on worries about the weakening global economy and the stronger dollar, in a post-holiday shortened session. In softs markets, cocoa closed at a fresh 2-1/2 year low, sugar dropped to the lowest level in more than 5-1/2 months and coffee also suffered losses.
Gold fell in recent financial markets activity, pressured by declines in equity markets, technical selling and gains in the dollar. Even though gold has followed riskier assets of late, physical bullion held by global exchange-traded funds rose to a record high, indicating some safe-haven buying by jittery investors.
Underpinning bullion’s investor sentiment was news that central banks bought nearly 26 tonnes of gold in October, boosted by a nearly 20-tonne purchase by Russia as well as buying from Mexico, Belarus and Colombia, data from the International Monetary Fund showed.
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