After the initial bounce, the Fed’s decision to maintain its current pace of asset purchases for a while longer is unlikely to have any major implications for commodity prices. Precious metals have the most to gain and their prices could rise further in the coming weeks, but the support from US monetary policy will still fade over time. Quantitative easing has been a far less important driver of industrial metals and oil prices, where the prospects for supply and the strength of the global recovery remain key. Indeed, the Fed’s caution partly reflects lingering uncertainty about the US economy, which is a potential negative for industrial commodities. And for most agriculturals, supply currently trumps everything.
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