ISTANBUL
A fluctuating course was observed in the commodity market last week due to the verbal guidance of US Federal Reserve Bank officials, uncertainties, and recession concerns.
As the demand for the US dollar decreased, concerns related to the economic activity had affected the commodity market severely.
St. Louis Fed President James Bullard said it is necessary to act as quickly as possible to reach 5% in the policy rate, while Cleveland Fed President Loretta Mester said interest rates should rise slightly above the 5.25-5.50% range which foreseen for the end of the year.
Boston Fed President Susan Collins said the policy rate should be raised to just over 5% and held there for a while.
Fed Vice Chairman Lael Brainard, known for his dovish remarks compared to other officials, signaled that monetary policy will be more restrictive for a while to ensure the inflation returns to 2% in a sustainable manner.
With the strengthening of the expectations that the price pressures will decrease, there have been rumors that the European Central Bank (ECB) might slow down the rate hikes in the second half of the year, while the optimistic expectations were eroded as ECB President Christine Lagarde stressed that they will continue to increase the interest rates until they reach the inflation target.
Precious metals
Last week, precious metals, excluding gold, were dominated by a downward trend.
Reaching its highest level since April 22 last year at $1,937.6 per ounce, gold ended the week at $1,926.9, up 0.4%.
The global recession risk and concerns about the course of monetary policies remained the focus of investors, and uncertainties increased the gold prices.
Silver fell 1.4%, platinum 2.2%, and palladium, among the commodity instruments most affected by recession concerns, 3.5% over the past week.
Base metals
While metals were generally optimistic last week, analysts said base metals started the year with declining stocks.
In the over-the-counter market, copper gained 2.9%, aluminum 0.4%, nickel 3.3%, and zinc 2.4%, while lead fell 2.2%.
Copper, which rose to $4.2911 per pound, decreased to $4.0681 due to recession concerns, but finished the last week at $4.2192 with a rise of 2.9%.
While the production at the Chilean copper mine Antofagasta fell by around 10% last year, copper also rose on concerns over supply in Peru, reduced demand for the dollar and optimism about the Chinese economy.
Domestic protests against Peru's Las Bambas mine, the country's third-largest copper mine, threaten 2% of the global copper supply. The mine has been unable to deliver copper concentrate since Jan. 3 due to safety concerns.
Aluminum also rose after the US-based global investment company Goldman Sachs Group raised its forecasts for the metal.
Used in many areas from automotive to electronics, it is expected to rise sharply with demand from Europe and China.
Analysts stressed that nickel supply is limited and nickel is a demanded metal in clean energy production.
Energy
A mixed trend was observed in energy commodities last week.
Brent oil rose 2.5%, while natural gas traded on the New York Mercantile Exchange fell 7.2%.
The rise in Brent oil prices was driven by optimism that economic activity and oil demand would increase in China, where strict pandemic measures were lifted.
Speaking at Davos, Liu Hi, China's deputy prime minister responsible for the economy, said life and production in the country returned to its normal course after the removal of measures, signaling an optimistic trend for the Chinese economy this year.
The minister also said they foresee an increase in imports, institutional investments, and household expenditures in the new year.
The International Energy Agency (IEA) expects global oil demand to reach a record level of 101.7 million barrels per day this year.
The Organization of Petroleum Exporting Countries and IEA predicted in their oil market reports that the global oil demand will reach a record level in 2023 with the economic recovery in China.
Meanwhile, natural gas prices decreased as the mild weather conditions stabilized the sectoral consumption and countries filled the stocks rapidly.
Agricultural commodities
Last week, a fluctuating course was observed in agricultural commodities.
Wheat traded on the Chicago Mercantile Exchange fell by 0.1%, soybeans 1.2%, and rice by 0.2%, while corn rose by 0.3%.
On the Intercontinental Exchange, cotton gained 5.5% and coffee 1.7%, while sugar fell by 0.2% and cocoa by 2.9%.
With reports that the soil moisture rate in coffee-growing areas in Brazil has reached its peak over the past seven years, production concerns about coffee as well as its prices have increased.
*Writing by Gokhan Ergocun
