Commodity markets fell sharply on Monday, led by a sell-off in gold, silver, oil and industrial metals, after the appointment of Kevin Warsh as the next chairman of the U.S. Federal Reserve led to increased selling of risk assets and investors’ shift to safer investments, further pressuring precious metals prices for a second day in a row.
Gold fell 9 percent to its lowest level in more than two weeks and silver fell more than 13 percent after both metals hit record highs last week. Oil fell by nearly 5.5 percent, after hitting multi-month highs, while copper on the London Metal Exchange (LME) fell by nearly 5 percent.
“The market’s decision to sell precious metals along with US stocks suggests that investors see Warsh as more inclined to a restrictive monetary policy,” said Vivek Dhar, commodity strategist at the Commonwealth Bank of Australia (CBA).
He added that the stronger US dollar is also putting additional pressure on precious metals and other commodities, including oil and base metals.
Asian stock markets opened the week lower, following the negative direction of futures contracts on Wall Street, while a chaotic sell-off in precious metals marked a jittery start to a week full of corporate earnings releases, central bank meetings and economic data.
