Gold tumbles

NEW YORK: Gold fell more than 2 percent to a 9-1/2-month low on Wednesday as a buoyant dollar extended its rally to the highest since 2003 on the back of upbeat US economic data that further cemented a case for increasing interest rates next month.

Bullion prices remained weak after minutes from the Federal Reserve’s Nov. 1-2 meeting showed policymakers appeared confident that the economy was strengthening enough to warrant interest rate increases soon.

Spot gold dropped 1.9 percent at $1,188.82 an ounce by 2:34 p.m. EST (1934 GMT), after falling 2.5 percent to $1,181.45, the lowest since since Feb. 10. US gold futures settled down 1.8 percent at $1,189.30.

Many in the United States will be away from their desks on Thursday for the Thanksgiving Day holiday.

“The November Fed minutes contained little market-moving information which puts all the emphasis on (Fed Chair Janet) Yellen’s December press conference and FOMC dot plot for clues on the future path of short term interest rates,” said Tai Wong, director of base and precious metals trading for BMO Capital Markets in New York.

Gold is highly sensitive to rising interest rates, which lift the opportunity cost of holding non-yielding assets such as bullion while boosting the dollar, in which it is priced.

Traders are pricing in a 100 percent chance of a December rate increase, according to the CME Group’s FedWatch Tool.

Gold has shed around 11 percent from a peak hit in the aftermath of the US election two weeks ago. The metal has been hit by expectations that the policies of US president-elect Donald Trump will boost economic growth and by strong US data supporting the case for a rate hike.

Silver fell by as much as 3 percent to $16.14 an ounce, its lowest since early June. Platinum shed 1 percent at $927.40 and palladium dropped 0.5 percent at $736.50.

Soyaoil jumps; grains sag

CHICAGO: Chicago Board of Trade soyaoil futures surged more than 6 percent on Wednesday after the US government released final requirements for biofuel use for next year, analysts said.

Soyabeans firmed on the jump in soyaoil, but trade was choppy. CBOT corn and wheat were lower, pressured by a stronger US dollar and profit-taking ahead of Thursday’s Thanksgiving holiday.

As of 12:13 p.m. CST (1813 GMT), most-active CBOT January soyaoil futures were up 2.22 cents at 36.99 cents per lb after rising the daily 2.5-cent limit to 37.27 cents, a contract high.

January soyabeans were up 1-1/2 cents at $10.31-1/2 per bushel. December corn was down 1-1/4 cents at $3.49-3/4 a bushel and December wheat was down 5 cents at $4.02-1/4.

Soyaoil soared after the US Environmental Protection Agency (EPA) set the target for total renewable fuel use for 2017 at 19.28 billion gallons, up from this year’s 18.11 billion gallons.

The total includes 15 billion gallons for conventional biofuel, mainly corn-based ethanol, and 4.28 billion gallons for the advanced biofuels mandate, which includes soya-based biodiesel.

The primary feedstock for US biodiesel fuel is soyaoil, so the EPA’s targets should tighten domestic soyaoil stocks. The US Department of Agriculture currently projects US soyaoil stocks at the end of the 2016/17 marketing year at 1.658 billion lbs.

As CBOT soyaoil futures climbed, soyameal futures fell on oil/meal spreading. Soyabeans are processed into soyameal, used in animal feed, and soyaoil, used in foods and biodiesel fuel. Brokers often trade on the spread, or price difference, between soyameal and soyaoil.

Soyabeans were choppy as support from the strength in soyaoil met pressure from profit-taking, after the January soyabean contract notched a four-month high at $10.35-3/4 a bushel.

CBOT corn futures had little reaction to the EPA’s biofuels targets and sagged on position-squaring ahead of the Thanksgiving holiday and strength in the dollar, which tends to make US grains less attractive on the world market.

Also, forecasts called for generally favourable weather in South America, where corn and soyabean crops are developing.—Reuters