NEW YORK (AP) — Industrial metals and energy pared their losses Tuesday after the Federal Reserve said it would buy government debt, signaling that it will act to support the economic recovery as needed. Gold prices settled lower before the statement, but shot up in after-hours trading.
Commodities had been down more deeply earlier in the day as investors saw hints of a slowdown in demand in China and worried over a weakening economy in the U.S.
The Fed said Tuesday that economic growth would be "more modest" than it had predicted seven weeks ago. It said it would buy Treasurys using funds from its investments in mortgage securities to help support the recovery.
Gold, which investors buy as a safe haven asset, settled down $4.60 at $1,198 an ounce before the Fed announcement. But in after-hours trading, the December contract was up around $1,208 an ounce.
Silver for September delivery fell 8.4 cents to settle at $18.158 an ounce, while October platinum dropped $5.90 to $1,537 an ounce. Both rose higher after the Fed's statement.
September palladium fell $9.05 to settle at $470.60 an ounce, while copper slid 4.15 cents to $3.3125 a pound after a report showing China's appetite for imports weakening.
China is the world's largest importer of copper. The other industrial metals had also fallen more steeply earlier because of the Chinese report, which said China's imports rose 22.7 percent to $116.8 billion in July. That's down from the 34.1 percent rate of expansion in June.
Energy prices also fell, although they pulled off their lows for the day after the Fed's report.
Crude, which had risen about 10 percent through July and August, nearly touching $83 last week, ended down $1.23, or 1.5 percent, to settle at $80.25 a barrel Tuesday. The September contract had dipped below $80 a barrel earlier in the day.
Heating oil slid $2.84 to $2.1254 a gallon, while natural gas fell 1.2 cents to $4.297 per 1,000 cubic feet and gasoline dropped 3.34 cents to $2.0853 a gallon.
"We've seen such a run up in commodities and the market in general" this summer, said Spencer Patton, founder and chief investment officer for hedge fund Steel Vine Investments LLC. "This could be the start of a little of a leg down, a pull back in the market."
Grains futures ended lower, and wheat prices continued to pull back from a two-year high hit last week after Russia said it was banning exports for the rest of the year because of a drought-ravaged crop.
Wheat for December delivery shed 17 cents to settle at $7.2675 a bushel, December corn dropped 9 cents to $4.09 a bushel and November soybeans lost 13 cents to $10.22 a bushel.