Commodities dropped to a four-month low, paced by declines
in crude oil and gold, on signs of climbing supplies of raw materials at a time
when the prospect of reduced Federal Reserve stimulus may cut demand.
The Standard & Poor’s GSCI Spot Index of 24 raw
materials lost 1.7 percent to settle at 612.24 at 4 p.m. in New York, after
touching 611.58, the lowest since July 1. West Texas Intermediate fell below
$95 a barrel for the first time since June. Gold reached a two-week low. Hog
futures capped the longest slump in three months, and cotton slumped to the
lowest since January.
Production is poised to top demand for everything from
coffee to zinc as ample rains this year boosted global crops and demand waned
for metals, grains and energy. U.S. crude inventories climbed to the highest
since June, data from the Energy Information Administration showed Oct. 30.
Commodity returns will be “mostly flat” in the next 12 months, and there are
“significant downside opportunities” in gold, copper and soybeans, Goldman
Sachs Group Inc. said Oct. 18.
The Fed signaled diminishing concern over higher borrowing
costs and cited “underlying strength” in the economy, even as it maintained $85
billion in monthly bond purchases on Oct. 30. The central bank’s statement
opens the possibility of reduced debt buying as soon as December, Citigroup
Inc. and Barclays Plc has said.
(Source: Bloomberg)
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