Commodities dropped to the lowest level in more than five years after the Federal Reserve raised its outlook for interest rates, bolstering the dollar and reducing the appeal of raw materials as a store of value.
The Bloomberg Commodity Index of 22 futures dropped as much as 1.3 percent to 120.4562, the lowest level since July 2009, and was last at 120.4843. The gauge has lost 4.2 percent in 2014 and is set for a fourth year of declines. Diesel decreased to a two-year low, while gold slipped to the lowest level since January. Wheat fell to the least since 2010 on the outlook for growing global output.
Commodity markets dropped and the dollar gained after Fed officials signaled yesterday they won’t be raising interest rates anytime soon while suggesting they would tighten credit at a faster pace once the liftoff has begun. The Bloomberg Dollar Index surged to a 14-month high yesterday.