Commodities slump roils global markets

Commodities markets slumped yesterday, led by deep losses in gold, silver, oil and industrial metals, as the choice of Kevin Warsh as the next Fed chair unleashed selling in risk assets that sent precious metals tumbling for a second session.

- NAVEEN THUKRAL

People look at gold jewellery for sale at the Grand Bazaar in Istanbul, Turkey.

(REUTERS)

Gold slid 5% to its lowest in more than two weeks, while silver fell more than 7%, following records hit by both metals last week.

Oil dropped nearly 5%, easing from multi-month highs, and London Metal Exchange copper fell 3%.

"The decision by markets to sell precious metals alongside US equities suggests investors view Warsh as more hawkish," said Vivek Dhar, a commodities strategist at Commonwealth Bank of Australia (CBA).

A hawkish Fed signals interest rates will stay higher for longer, supporting the dollar and raising the opportunity cost of gold and silver, dimming their appeal.

"A stronger US dollar is also adding pressure on precious metals and other commodities, including oil and base metals," added Mr Dhar, who is sticking with a gold price forecast of $6,000 in the fourth quarter, however.