Commodities: Metals in decline as traders respond to qualitative easing

Oil prices retreated on Friday as the glut in markets continued to take its toll, while gold and metal futures slipped as the US dollar strengthened.

At the end of Friday’s session, WTI futures fell 2.6% to $45.35 while ICE Brent futures rose 0.4% to $48.72.

The death of Saudi Arabia's King Abdullah bin Abdulaziz Al Saud caused an immediate jump in crude prices which later subsided.

CMC Markets analyst Jasper Lawler said: “The new King of Saudi Arabia is unlikely to mean a new policy towards an output cut so pressure will remain to the downside until the fundamental oversupply is addressed or there is a big drop in the value of the US dollar.”

Over in the gold patch, gold futures for delivery in February fell by $8.9 per ounce to $1,282.10, as the US dollar strengthened. By the end of the session euro/dollar was down 1.22% at 1.12.

In the previous session the European Central Bank surprised traders with a larger than expected programme of quantitative easing.

IG analyst Chris Beauchamp said: “Indeed, the strength of the rally, nearly 10% in a little over three weeks, has left the metal vulnerable to the classic combination of profit-takers and counter-trend traders that are looking to take advantage of any weakness.”

Meanwhile, copper fell as Chinese manufacturing let down the market. Out on the LME, three-month copper futures came in low, dropping 2.2% to $5,542.50.