Commodities: Oil and gold drop, copper rebounds en route to Fed meeting

Oil prices and gold futures were negative on Wednesday while copper futures rebounded ahead of the Federal Reserve meeting.

At the end of Wednesday’s session, Brent futures fell 2.2% to $48.49 while ICE WTI futures dropped 3.4% to $44.35.

CMC Markets analyst Jasper Lawler said: “The US is still drilling at a furious rate trying to recover as much sunk cost as possible in the hopes that oil prices recover before cash flows and credit dry up. Until such time that US drillers give up and the rig count drops, the upside potential for oil is fairly limited.”

Gold for immediate delivery fell 0.8% to $1,281.67 an ounce in New York, after the Greek election result created some market volatility.

IG analyst David Madden said: “Gold is making its way lower as traders don’t want to bank on dovish tones from the Fede, even though the possibility of an interest rate rise from the US in the first-quarter is looking less likely. Gold’s sprint to $1300 at the beginning of the year was heavily influenced by the uncertainty around Greece, and now that the Syriza-lead government hasn’t brought about the apocalypse the metal has lost its edge.”

Meanwhile, on LME, three-month copper futures came in higher than the previous session, rising 0.4% to $5,472.50.

Lawyer added: “Copper prices drifted back below $2.50 per lb on Wednesday towards the $2.45 which saw a big bounce on Monday.The drop in US durable goods orders reported on Tuesday doesn’t bode well for the prospect of US demand offsetting slowing demand from China.”