The falls in the prices of industrial commodities this week were in line with the broader downturn in riskier assets, including equities. However, factors specific to commodity markets, notably China’s weak activity data for October and an increase in US oil stocks, also contributed to the downturn in prices.
Looking ahead, next week could be relatively quiet. There is little in the way of market-moving data and the US markets will be closed for Thanksgiving on Thursday. Investors will be closely watching for signs that the US Senate are progressing towards a vote on their version of the Republican tax bill. The tax stimulus will provide a boost to GDP growth next year which, in turn, should prompt the Fed to raise rates more aggressively. On Wednesday, the minutes from the October FOMC meeting should provide a clearer indication that the Fed is still on track for a December rate hike. While this is largely priced into bond markets, the price of gold could still fall back.
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