The slide in commodity prices today following the release of an apparently strong US Employment Report underlines their sensitivity to expectations of further monetary support. As it happens, the pace of improvement in the US labour market is still painfully slow, so it is far too soon to speculate about an early end to QE3. Gold at least should also still benefit from a renewed escalation of the crisis in the euro-zone. Nonetheless, commodity markets are probably right to be thinking that they cannot rely both on a strong economic recovery in the US and unlimited largesse from the Fed.
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