Several dollar-denominated commodities saw their prices drop to end the week. Analysts are pointing to the latest U.S. jobs report, which beat projections, as a most likely culprit behind the across-the-board downward move.
"The jump in employment this past November was the largest one-month jump the U.S. has seen since January 2012."
According to Business Insider, nonfarm payrolls in the U.S. grew by 321,000 in November, a mark that shattered economists' expectations of a 230,000 job increase for the month. The jump in employment this past November was the largest one-month jump the U.S. has seen since January 2012. Additionally, it was the 10th straight month that the U.S. economy added more than 200,000 jobs – the longest streak of that magnitude since 1995.
It is commonly held that as the U.S. dollar grows in strength, commodities denominated in the currency tend to see their prices decline. The sustained recovery of the U.S. economy, as is indicated by the consistently strong jobs reports, has been concurrently followed by increases in the value of the greenback.
The jobs report, in addition to other factors, may be what is causing the recent downward pressure on the prices of these commodities.
Crude oil takes a tumble, but still erases some of its losses
Based on a report from MarketWatch, on the New York Mercantile Exchange, crude futures for delivery in January traded down 17 cents, or 0.3 percent, to $66.64 a barrel after being down 46 cents shortly before the employment data, paring some of its losses.
Despite today's drop, MarketWatch reported that the contract is showing a weekly gain of 0.8 percent. January Brent crude on London's ICE Futures exchange fell 12, or 0.2 percent, to $69.51 a barrel. The contract for Brent is down 1 percent for the week.
While analysts have suggested that the U.S. jobs report may have had an impact on the commodity, it seems the continued supply glut in light of the breakneck pace of production from both the U.S. and OPEC may also be playing a role in crude's recent declines.
Copper prices fall after strong U.S. jobs report
Copper's decline may have come on the news that the U.S. nonfarm payroll grew far beyond expectations. Analysts are increasingly seeing the rising employment and continued recovery of the U.S. economy as a sign that the Federal Reserve will increase interest rates.
According to Bloomberg, copper futures for March delivery fell 0.3 percent to $2.907 a pound at on the Comex in New York. The metal pared earlier gains of as much as 0.8 percent. A decline today would be the third in the last four trading sessions.
The news source noted that in addition to the jobs report, flagging Chinese demand for the red metal may also be a factor in the recent spate of declines.
"The jobs data was so good that the concern now is about the Fed raising rates," Bill O'Neill, partner at Logic Advisors in Upper Saddle River, New Jersey, said in a telephone interview with Bloomberg. "Going forward, a lot will depend on the economic data out of China."
Gold prices slump to finish the week
Gold prices fell again, likely due to the ongoing economic recovery as evidenced by the stellar November jobs report. Many believe that the Federal Reserve will raise interest rates now that the economy seems like it may be able to handle higher borrowing costs.
Bloomberg reported that gold futures for February delivery fell 1.1 percent to $1,194.20 an ounce at 10:21 a.m. on Friday morning on the Comex in New York. As the news source noted, the possibility of higher interest rates often dampens the attractiveness of the metal, which generally offers investors returns when prices increase.
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