Gold prices fall over 1% as US yields rebound
Gold prices fell on Thursday as the dollar gained ground against most major rivals with US treasury yields rebounding strongly while markets assess the Federal Reserve's latest policy statement.
US treasury yields spiked to 15-year highs after bullish signals by the Fed, pressuring stocks.
Yesterday, the Fed held interest rates unchanged at 5.5%, the highest in 22 years, but hinted strongly at a hike in November.
As for data, unemployment claims fell 20 thousand to 201 thousand last week.
Otherwise, the dollar index rose 0.2% as of 17:57 GMT to 105.3, with a session-high at 105.7, and a low at 105.2.
On trading, gold spot prices fell 1.4%, or $27.5 as of 17:58 GMT to $1,939.6 an ounce.
What's the impact of the automotive strikes on US steel industry?
The monthly crude metals index MMI is trading sideways this month after a 2.83% drop in August, with steel prices falling all across the board.
Steel prices tumbled 10.3% this month, plumbing January 2023 lows and heading towards $600 a tonne.
Recently, automotive workers launched strikes against Ford, GM, Stellantis after the collapse of wage negotiations.
The strikes started with 13 thousand workers and could very well last a long time, potentially three months, in turn leading to a loss of 400 thousand tonnes of steel demand, alongside a drop of 550 thousand cars a month of lost production.
The first company that took heavy losses is US Steel company with its B steel furnaces idled due to weaker demand.
In several major US Steel furnaces, it's estimated the capacity has fallen to 75% or so, and is expected to collapse across the board as the strikes carry on.
Historic Labor Strikes
The UAW union has launched a strike for the first time ever against all three major automotive companies, following a single extended strike against GM for about a month in October in 50 factories, which similarly hurt steel prices considerably.
The length and width of such automotive strikes have a history of negative impact on many industries ans chief of which the steel industry, however a quick resolution of the strikes is expected to easily boost steel prices and production once more.
However, the current situation does look bleaker than usual, and could easily extend for six weeks or more, in turn dragging steel prices and production heavily down, not just in the US but worldwide.
Wall Street declines to one-month low as US yields increase
US stock indices fell on Thursday to one-month lows as US treasury yields rose once more while investors continue to assess the Federal Reserve's policy statements.
US treasury yields spiked to 15-year highs after bullish signals by the Fed, pressuring stocks.
Yesterday, the Fed held interest rates unchanged at 5.5%, the highest in 22 years, but hinted strongly at a hike in November.
As for data, unemployment claims fell 20 thousand to 201 thousand last week.
On trading, Dow Jones fell 0.5%, or 190 points to 34,250, while S&P 500 fell 1.1%, or 47 points to 4355, as NASDAQ declined 1.2%, or 166 points to 13,302.
Oil prices resume gains on hopes the world economy is rebounding
Oil prices extended their gains in American trade on Thursday away from one-week lows, resuming strong gains after a two-day hiatus.
The gains come amid hopes the pressures facing world economies are subsiding as global central banks pause their aggressive policy tightening measures.
Prices are also boosted by the steep drop in US crude stocks last week in a positive sign for demand.
Global Oil Prices
US crude rose 1.9% to $90.94 a barrel, with a one-week trough at $88.42, while Brent climbed 1.6% to $94.56 a barrel, with a one-week trough at $92.24.
On Wednesday, US crude lost 1.6%, while Brent slipped 1.3%, the second loss in a row on profit-taking off ten-month highs.
Global Economy
Global central banks including in Switzerland, Britain, the US, have all decided to pause interest rate hikes to gauge economic response.
Such a step will likely be followed by steps to support the economy early in 2024, which could include interest rate hikes.
A rebound in global economic conditions will obviously boost fuel demand.
US Stocks
The Energy Information Administration reported a drop of 2.1 million barrels in US crude stocks last week, while analysts expected a drop of 1.3 million barrels.
Gasoline stocks fell 800 thousand barrels to 219.5 million barrels, as distillate stocks fell 2.9 million barrels to 119.7 million barrels.
US Production
The EIA also reported no change in US production at 12.9 million barrels, the highest since March 2020.