The response of commodity prices to Wednesday’s US rate hike was relatively muted as the move had been widely anticipated. Predictably, precious metals, notably gold, fell on the news but further downside should be limited unless real bond yields continue to rise. In contrast, the prices of some industrial metals trended higher after the FOMC meeting, perhaps taking heart from the fact that Fed tightening reflects a stronger US economy. Meanwhile, oil prices declined this week as data showed high OPEC production in November and rising US crude output.
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