Commodities Markets Fall as China’s Growth Rate Disappoints

May 23, 2015 sarah Uncategorized

Spot gold prices jumped more than 1% in recent trading activity. As the euro strengthened against the dollar, bullion rebounded from $1,650 per ounce. Some market participants said disappointing US jobless claims data fed hopes that the US Federal Reserve would launch a third round of quantitative easing, or QE3. QE3 could end up boosting the gold market.

Commodity markets ended a week of volatile trading by closing broadly lower after China’s first-quarter economic data disappointed investors who had been expecting forecast-beating growth.

The Thomson Reuters-Jefferies CRB index, a global commodities benchmark, fell nearly 1% on the day as 15 of the 19 futures markets it tracked settled in the red. For the week, the CRB lost 1.2%. A strong dollar also weighed on commodities, most of which are largely traded in the US currency.

A weak reading for US consumer sentiment in early April added to the bearish sentiment. In China, GDP for the first quarter of 2012 grew at its slowest rate in nearly three years.

Futures investors now worry that a five-quarter slide has not bottomed out and more policy action will be needed to spur growth in the world’s second largest economy. China is the biggest importer of base metals and one of the largest consumers of most major raw materials produced across the world.

According to forecasters and agronomists, erratic weather is showing no mercy to Brazil’s coffee crop as conditions turn dry again. This is depriving beans of a last moisture boost that would help them swell out more before harvesting begins in about a month.

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