Upward trend continues in commodity market

ISTANBUL

An upward trend continued in the commodity market last week.

While the trend was observed especially in precious metals and base metals, agricultural commodities posted mixed figures, and energy prices declined.

According to analysts, the below-expected inflation data in the US increased the hopes that the Fed would slow down the aggressive interest rate hikes.


According to the last week's data, the US annual inflation was at a nine-month low of 7.7%.

Financial markets' expectation that the Fed will raise rates by 50 basis points next month has strengthened.

Cleveland Fed President Loretta Mester said that she expects rate hikes to continue to keep pressure on inflation, while Kansas City Fed President Esther George said that she expects slower rate hikes.


San Francisco Fed President Mary Daly expects interest rates to rise to 4.9% next year.

With these developments, the dollar index closed last week with a decline of 4% at 106.3. The ounce price of gold, which recorded the strongest weekly rise since July 2020 on expectations that the Fed will ease hawkish policies, rose by 5.3% on a weekly basis to $1,770.

Silver, palladium and platinum increased by 3.8%, 9% and 7%, respectively.

Base metals posted increases last week; Copper by 4.4%, lead 5.9%, aluminum 5.2%, nickel 10.2%, and zinc 4.6%.


Amid increasing COVID-19 cases in China, the price of Brent oil per barrel dropped 3.1% to $95 at the last week's close.

Natural gas prices in the New York Mercantile Exchange dropped by 7.8%.


China's COVID-19 figures also had an impact on agricultural commodities; Wheat dropped by 4%, corn 3.5%, and soybean 0.8%, while rice increased by 1.8%.


Cotton lost 1% and coffee 2.1%, while sugar and cocoa increased by 3.7% and 3.5%, respectively.

Delays in transporting cocoa supplies from farms to ports in Ivory Coast due to heavy rains were a short-term increasing factor for cocoa prices.

Zafer Ergezen, a commodity market expert, said that wheat prices decreased after reports that Russia will not interfere with grain shipments.

Elections in Brazil and the Fed's interest rate decision had an impact on sugar prices, he noted.


Reminding that coffee ended the week with a decline, Ergezen said that with the impact of rains in Brazil, the increasing production expectations caused a loss of value in prices.


Fitch Solutions and the US Agriculture Department estimated a surplus in coffee production, he added.



*Writing by Gokhan Ergocun