Commodity prices surge following Fed’s rate cut

ISTANBUL

Commodity markets saw an upward trend last week after the Fed’s 50-basis-point rate cut after four years, while the possibility of a soft landing strengthened once again in the money market expectations.

After the September meeting, Fed Chairman Jerome Powell said that the upside risks to inflation have lessened and downside risks to employment rose.

Meanwhile, the possibility of avoiding a recession boosted the risk appetite.

Precious metals down except for gold, silver

The ounce price of gold reached a record high of $2,658.8, up 1.7%, as analysts stated that the Fed’s rate cut and central bank purchasing could boost the price to $2,900, while the low interest rates reduce the opportunity costs of holding noninterest-bearing gold.

The ounce price of silver rose 1.5% last week.

Meanwhile, the ounce price of platinum fell 2% and palladium 0.1% last week.

As for base metals, the pound price of copper rose 2.7% last week following the Fed’s rate cut, as the hopes that the demand would rise came to the fore.

The price of aluminum climbed 0.8% in the same period due to possible supply disruptions, as the news of the collapse of a water storage pool at an aluminum oxide refinery in India caused supply concerns.

At the same time, the price of nickel rose 3.4% and lead 0.1%, while zinc fell 1.2%.

Energy group on rise due to many factors

The barrel price of Brent crude oil rose 3.2% on rising concerns about the US oil production due to Hurricane Francine, while the US Energy Information Administration said that commercial crude oil stocks fell 1.6 million barrels last week to 417.5 million barrels. This was a substantial decline compared to the market expectation of a 200,000-barrel decrease.

Meanwhile, escalations in the Middle East, where most oil resources are located, continued to impact prices.

The price of natural gas traded on the New York Mercantile Exchange in British thermal units (MMBtu) gained 6.6% over the same period due to geopolitical risks.

Agricultural group sees mostly increases

Sugar prices rallied 13.6% last week amid lingering supply concerns over drought and extreme heat wave in Brazil, which caused massive fires, damaging crops, while the strengthening Brazilian real against the US dollar discouraged sugar producers from exporting.

Meanwhile, soybean prices climbed 0.6% on concerns that dry weather conditions in the US would negatively affect production.

At the same time, the pound price of coffee tested its highest level since September 2011 at $2.6595, only to end the week sharply lower, down 3.4%.

Wheat prices fell 4.4% on expectations that the geopolitical tensions between Russia and Ukraine would cool down.

Rice prices increased 0.6% due to continuing demand from East Asia.

Additionally, the bushel price of corn rose 2.8%, the pound prices of cotton climbed 4.6%, while the ton price of cocoa fell 0.5% last week.


*Writing by Emir Yildirim