Financial Market Turmoil, Firm Dollar Pressures Commodities

The rising U.S. Dollar and other concerns pressured key commodity markets on Friday. An early rally in gold failed to gain traction and the market finished lower. Copper plunged to its lowest level since December 13. Crude oil turned lower for the year and natural gas is in a position to erase the winter season’s gains.

Gold

Gold futures inched higher early Friday on nervousness ahead of the stock market opening, but prices retreated when stocks begin the day on an upswing. The buying was tentative due to a firmer dollar and worries about rising global interest rates.

April Comex Gold futures settled at $1315.70, down $3.30 or -0.25%.

Gold firmed at midday in reaction to another steep intraday sell-off in stocks, but the inability to take out this week’s lows, led to a late session rally in equities and a higher close. This pressured gold futures into the settlement.

Copper

Copper futures plunged on Friday as stock markets extended this week’s sharp slide, with the prospect of rising U.S. interest rates denting hopes that surging economic growth would drive up demand. The market posted its largest weekly drop since 2016.

March Comex High Grade Copper settled at $3.0335, down 0.0485 or -1.57%.

Traders also said that a jump in inventories also weighed on prices. In December, traders placed high bets on rising prices, so there is still room for further correction and to take profits. Cyclical pressure is also weighing on prices.

Crude Oil

U.S. West Texas Intermediate and international-benchmark Brent crude oil settled lower for a sixth day. The selling was prompted by concerns over rising production, a strong dollar and a broad sell-off in risky assets.

March WTI crude oil settled at $59.20, down $1.95 or -3.19% and April Brent crude oil closed at $62.79, down $2.02 or -3.12%.

After early session weakness, the markets extended their losses following a report from Baker Hughes that showed the U.S. oil rig count rose by 26 rigs to 791, the highest total since April 2015.

Natural Gas

Natural gas prices retreated on Friday as weather concerns failed to impress investors, putting the market in a position to wipe out the entire winter rally which began in mid-December.

March Natural Gas futures settled at $2.584, down $0.113 or -4.19%.

In January, U.S. withdrawals set a record of 359 billion cubic feet for the week-ended January 5 and 288 Bcf for the week-ending January 19. However, since the record weekly drop, the weekly inventory decreases haven’t been very impressive.