Chicago 06/07/2016 - Base and precious metals markets saw minor adjustments following the release of the Federal Reserve meeting minutes, which showed a majority of Fed members were cautious to adjust rates following poor US labour data and the UK referendum.
"Most participants noted that the upcoming British referendum on membership in the European Union could generate financial market turbulence that could adversely affect domestic economic performance," the June Federal Reserve meeting minutes said.
Copper for September delivery on the Comex division of the New York Mercantile Exchange was last down 2.60 cents or 1.2 percent to $2.1575 per pound. The contract has now finished in negative territory for three straight days.
Comex gold for August settlement rose $9.40 or 0.7 percent to $1,368.10 per ounce. Earlier, the contract touched $1,377.50, the highest since March 2014.
The Brexit decision has roiled markets and increased concern that global economic conditions are deteriorating. Bank of England Governor Mark Carney spoke publicly yesterday and forecasted a poor economic outlook following the vote with the pound dropping to a 30-plus year low in the interim.
Still, a majority of Fed members indicated that if economic growth – particularly job gains – continued at sufficient pace, a near-term rate would be appropriate.
"Almost all participants judged that the surprisingly weak May employment report increased their uncertainty about the outlook for the labor market," the statement said. "Even so, many remarked that they were reluctant to change their outlook materially based on one economic data release."
Earlier this week, Federal Reserve San Francisco President John Williams said the Brexit decision is a modest risk to the US outlook and that he expects a rate hike this year.
"Any concerns of further domestic weakness or rising global pressures from the Committee’s viewpoint are no doubt exacerbated at this point in the aftermath of the Brexit," Lindsey M. Piegza, Chief Economist at Stifel, said.
"Given the Fed’s reduced outlook for domestic growth and the longer-term pathway of rates exemplified in the June Summary of Economic Projections (SEP), we anticipate a pronounced dovish tone in the accompanying minutes with an increased awareness of the fragility of the domestic economy, as well as growing risks of contagion from developments abroad," she added.
Prediction markets are currently assessing a zero percent chance that the Fed moves in a couple weeks, with a majority seeing 2017 as the earliest time period for another rate hike, according to the CME Group FedWatch.
In data, the US trade balance for May was -41.1 billion, missing the forecast of -40.0 billion. ISM non-manufacturing PMI for June came in at 56.5, above the estimate of 53.3.
Finally, final services PMI in June was a shade above expectations at 51.4, consensus called for a 51.3 figure.
Turning to US markets, the Dow Jones industrial average and S&P were each 0.2 percent, while the dollar softened 0.2 percent to $1.1097 against the euro.
Meanwhile in other commodities, light sweet crude (WTI) oil futures on the Nymex reversed up 85 cents or 1.8 percent to $47.45 per barrel while the most-actively traded Comex silver contract was trading at $20.170 per ounce, up 26.3 cents.
(Editing by Tom Jennemann)