Commodity prices down except for precious metals and coffee

ISTANBUL

Commodity prices took a downturn last week due to waning demand, particularly from China, though precious metals saw notable increases as expectations for central bank rate cuts grew amid ongoing geopolitical risks.

Gold prices surged 2.4% to $2,721.40 per ounce, spurred by heightened tensions in the Mideast, which prompted investors to seek safe-haven assets. Central banks are gradually moving away from their two-year tightening policies while continuing to buy gold.

Analysts suggest that the increased risk perception due to geopolitical tensions has contributed to gold’s appeal, despite the rise in the US Dollar Index and bond yields. Additionally, uncertainty surrounding the Nov. 5 US presidential elections could further boost gold prices, with members of the London Bullion Market Association forecasting new record highs within a year.

Silver prices rose 8.2% to $33.71 per ounce, buoyed by better-than-expected growth data from China, while platinum and palladium climbed 2.9% and 1.8%, respectively.

Conversely, base metals faced declines amid demand concerns in China, as a newly announced stimulus package for the real estate sector fell short of expectations. Copper prices dropped 2.3% last week, as did aluminum 0.8%, lead 1.1%, nickel 5.1%, and zinc 2%.

In the energy sector, OPEC projected a global oil demand increase of 1.9 million barrels per day for this year. However, next year’s forecast was revised downward by 100,000 barrels, primarily due to anticipated slowdowns in Chinese demand. The International Energy Agency (IEA) also estimated a 660,000 barrels per day increase in global oil supply this year, contributing to a 7.3% drop in Brent crude oil prices last week.

Natural gas prices on the New York Stock Exchange fell 14.5% per British thermal unit (MMBtu) amid forecasts of above-average temperatures.

In agriculture, corn and soybean prices dropped 2.7% and 3.5%, respectively, due to oversupply in the US stemming from record-high production estimates. Coffee prices rose 1.4% per pound, driven by concerns over production linked to below-average rainfall in Brazil. Sugar prices fell 0.5% due to optimism over ample harvests in India, while cocoa prices declined 4% per ton amid expectations of increased production in the Ivory Coast. Cotton prices fell 2% per pound, while wheat dropped 4.3% per bushel, and rice prices remained stable.