The commodities sell-off intensified Monday, with US oil falling below $50 on supply concerns and gold prices plunging to new five-year lows as investors continued to favour the dollar in anticipation of higher US interest rates later this year.
US benchmark crude fell below $50 a barrel Monday. It would eventually settle down 1.5 percent to $50.15 a barrel on the New York Mercantile Exchange, its lowest settlement since April 2. The August contract for West Texas Intermediate (WTI) expires Tuesday.
Global benchmark Brent crude tumbled 0.8 percent to $56.65 a barrel on the International Currency Exchange (ICE) in Europe.
Supply concerns continue to undermine oil prices this year. Prices had rallied through April after falling to nearly six-year lows in March, but record production levels and the more recent Iran nuclear deal have kept prices subdued.
Elsewhere in the commodities market gold prices experienced a massive sell-off Monday, falling below $1,100 a troy ounce for the first time in more than five years. Gold for August delivery, the most actively traded contract, closed at $1,104.60 a troy ounce, down 2.5 percent.
Gold prices are under renewed pressure after Federal Reserve Chair Janet Yellen indicated last week that US interest rates would begin to rise this year. The Fed has four more rate meetings left this year and speculation on Wall Street is that a rate adjustment is unlikely before October. Binary Options Traders should nevertheless monitor the next rate meetings scheduled for July 28-29 to gauge the central bank’s future rate-hike plans.
The US dollar continued to trend upward against world currencies after reaching nearly three-month highs last week. The dollar index climbed 0.2 percent to 98.05.
European stock markets received a boost at the start of the week after Greece announced it had begun repaying its loans to international creditors. Athens cleared arrears with the International Monetary Fund (IMF) by making a €2.05 billion payment Monday. Athens also posted a €4.2 billion payment to the European Central Bank (ECB) and a €500 million payment to the Greek central bank.
Greece made its payments using the €7.16 billion bridging loan secured last week as part of the Eurozone bailout agreement. The new agreement will provide Greece with €86 billion in funding over three years in exchange for onerous economic and financial reforms.
All of Europe’s major stock indices closed higher Monday. The FTSE 100 in London rose 0.2 percent to 6,782.69, the DAX Index in Frankfurt climbed 0.5 percent and the CAC 40 Index in Paris rose 0.4 percent to 5,142.49. The Euro Stoxx 50 Index – a leading gauge of Eurozone stocks – climbed 0.4 percent to 3,686.58.
The benchmark US indices posted modest gains Monday, with the Dow Jones Industrial Average and S&P 500 Index each adding 0.1 percent. The technology-heavy Nasdaq Composite Index rose 0.2 percent.
There were no major economic data releases Monday. Imperial Options Traders may be interested in Wednesday’s Inflation Report Hearings in the United Kingdom, as well as the official minutes from the July Bank of England (BOE) rate meetings.