Metals finish slightly higher amid early weakness in dollar; some pullback after Fed meeting

Metals finish higher amid early weakness in dollar

NEW YORK — Gold and other metals gave up some ground Wednesday after the Federal Reserve noted that inflationary pressures would likely remain in check.

Investors have been sending prices higher for oil, copper, grains and other commodities as a hedge against inflation. A weakening dollar has also been bolstering commodities prices since it makes them more affordable to holders of other currencies.

The Fed’s statement at midafternoon on inflation sent metals off their highs for the day in after-hours trading. They had risen earlier as the dollar weakened.

Despite the Fed’s assurance on inflation, Matt Zeman, head trader at LaSalle Futures in Chicago, said commodities traders haven’t made up their minds yet about which direction prices are going.

“The next couple of days will give us a much better idea of what this Fed meeting means for the average investor out there,” he said. “If people are not worried about inflation, then we’re going to see less buying. If people are worried about inflation, we will see buying.”

The dollar edged higher against the euro after the Fed kept its benchmark interest rate near zero. The central bank also did not announce any plans to step up its purchases of Treasurys, as many investors had hoped. The Fed has been buying up more than $1 trillion in debt this year in an effort to keep interest rates low and speed up an economic recovery.

“The dollar popped today because there was the expectation that the Fed may increase their debt purchases, and that didn’t happen and that’s a dollar positive,” Zeman said. By buying up debt, the Fed effectively pumps more money into the system, which tends to weaken the dollar.

Gold for August delivery rose $10.10 to $934.40 an ounce on the New York Mercantile Exchange.

July silver rose 6.6 cents to $13.9420 an ounce, and July platinum rose $2.50 to $1,167.90 an ounce.

September copper futures added 6.9 cents to $2.2810 a pound. Aluminum rose 2 percent.

Energy prices declined on the Nymex after the government reported that gasoline in storage increased for the third week in a row — a clear sign that demand is still weak.

Oil prices have risen sharply in recent months, driven largely by a falling dollar. This has led investors to buy up the commodity as a hedge against inflation. But analysts have warned that prices don’t necessarily reflect prospects for future demand and data continues to reinforce that notion.

Light, sweet crude for August delivery lost 57 cents to settle at $68.67 a barrel.

In other Nymex trading, gasoline for July delivery dropped 5.07 cents to $1.8425 a gallon and heating oil shed 3.09 cents to settle at $1.7381.

Natural gas for July delivery fell 11.8 cents to $3.761 per 1,000 cubic feet.

Grain prices were mixed on the Chicago Board of Trade.

September wheat futures fell 8 cents to $5.6775 a bushel, while corn for September delivery slipped 2.25 cents to $3.95 a bushel.

July soybeans rose 6 cents to $11.85 a bushel.

Cotton and cocoa futures were also higher.