June 23 (Bloomberg) -- Commodities dropped after the Federal Reserve reduced its growth and employment forecasts for the world’s biggest economy, worsening the outlook for demand.
Crude oil lost 2.7 percent to $92.88 a barrel at 12:29 p.m. in London, zinc fell 1 percent to $2,228.50 a metric ton and corn dropped 1.9 percent to $6.3775 a bushel. Gold for immediate delivery fell 0.7 percent to $1,537.90 an ounce and the Standard & Poor’s GSCI gauge of 24 commodities slid 1.9 percent.
The Fed reiterated a pledge to keep interest rates near zero and said it will complete a $600 billion bond-purchase program as scheduled this month, even as Chairman Ben S. Bernanke said the recovery is progressing “more slowly” than expected. The economy will expand between 2.7 percent to 2.9 percent this year, down from forecasts ranging from 3.1 percent to 3.3 percent in April, it said.
The central bank “acknowledged that the slowdown may not be temporary but offered no hint of further monetary support,” commodity analysts at Australia & New Zealand Banking Group Ltd. led by Mark Pervan said in a report. “The cautious tone in the Fed’s statement dashed expectations of some looking for a hint of more asset purchases.”
Commodities rallied about 80 percent in the two years to the end of 2010 as central banks worldwide spent trillions of dollars to boost growth and rescue banks from the 2008 financial crisis and economic slowdown.
Oil for August delivery declined as much as 2.9 percent to $92.67 a barrel on the New York Mercantile Exchange. U.S. oil stockpiles dropped less than forecast and inventories at Cushing, Oklahoma, the delivery point for the New York-traded West Texas Intermediate grade, increased for the first time in four weeks.
“The fundamental story across the board is of limited growth,” said Jonathan Barratt, managing director of Commodity Broking Services Pty in Sydney. “We’ve got plenty of crude. It’s got to be a geopolitical event” to push crude above $100 a barrel again, he said.
Copper, zinc and aluminum declined. Copper for three-month delivery dropped as much as 0.8 percent to $8,940 a ton on the London Metal Exchange, and last traded at $8,970.
Corn tumbled and wheat fell as improving weather boosted output prospects in the U.S., the largest exporter. December- delivery corn fell as much as 2.3 percent to $6.35 a bushel.
Gold for August delivery fell 1 percent to $1,538.70 an ounce. Futures climbed to $1,559.30 yesterday, the highest for a most-active contract since May 2, when the price reached a record $1,577.40.
Prices of gold and silver may decline in the next three months, said Marc Faber, publisher of the Gloom, Boom & Doom report. Still, he will keep accumulating gold, Faber said in a Bloomberg Television interview from Hong Kong.
--With assistance by Weiyi Lim in Singapore. Editor: James Poole, Stuart Wallace
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