- BIST10012,151-0.94%
- USD49.220.00%
- EUR55.21+0.28%
- GOLD4,194.30-0.52%
- INTEREST37.00%-1.00
- BITCOIN82,977-0.83%
- October 12, 202619°
- BIST10012,151-0.94%
- USD49.220.00%
- EUR55.21+0.28%
- GOLD4,194.30-0.52%
- INTEREST37.00%-1.00
- BITCOIN82,977-0.83%
- October 12, 202619°
Metals decline while energy and some agricultural commodities rise
In the past week, precious and base metals declined in global commodity markets, while energy products gained value. Brent crude rose 3.5% and natural gas 1.2%, while gold ended the week at $4,141 per ounce, down 3.4%.
Metals declined while energy products rose in global commodity markets during the past week. Inflation remaining above targets and high oil prices strengthened expectations that leading central banks, particularly the US Federal Reserve (Fed), could maintain tight monetary policy.
Amid increased selling pressure in global bond markets, the yield on US 10-year Treasury bonds rose to 5.34% and the yield on 30-year Treasury bonds reached 5.69%, their highest levels since 2002. The yields later stabilized at 5.28% and 5.61%, respectively.
Rising bond yields supported the dollar. The dollar index ended the week at 101.9, up 1%. However, inflation and employment data released in the United States weakened expectations that the Fed would raise interest rates in the near term.
The core personal consumption expenditures price index, excluding food and energy prices and closely watched by the Fed, rose 0.2% month over month and 3% year over year in August. Nonfarm payrolls in the United States increased by 29,000 in September, below expectations, while the unemployment rate rose to 4.2%. Following the data, the probability of a Fed rate hike in October fell to 23% in money markets.
Losses deepen in precious metals
A stronger dollar and higher US Treasury yields put pressure on precious metals, which do not offer interest income. Rising bond yields increased the opportunity cost of holding these metals, while the dollar's appreciation made them more expensive for investors using other currencies.
Gold fell to $4,111 per ounce amid selling at the start of the week, reaching its lowest level since August 5. Concerns that tensions in the Middle East could drive up inflation through oil prices kept expectations of interest rates remaining high for an extended period alive.
Core inflation coming in below expectations and weak employment data provided temporary support for gold. However, renewed selling after gains on the final trading day of the week prevented gold from recovering its weekly losses.
On a per-ounce basis, prices fell 8% for palladium, 6.1% for silver, 4.6% for platinum and 3.4% for gold. Gold ended the week at $4,141 per ounce. In silver, expectations for industrial demand also weakened as the amount used in solar panel production was reduced faster than expected and new panel installations slowed.
Dollar and demand pressure weigh on base metals
A stronger dollar, high energy costs and concerns about global demand pushed base-metal prices lower. Energy costs driven up by the conflict between the United States and Iran, along with concerns about industrial demand in China, supported a cautious outlook in metal markets.
Data showing that Chile's copper production in August fell 12.8% year over year, together with the prospect of a strike at the Escondida mine, increased supply concerns. China's manufacturing Purchasing Managers' Index rose to 50.1 in September, returning to expansion territory and supporting the demand outlook, but copper did not recover its weekly losses.
The People's Bank of China's 25-basis-point cut to the one-year funding rate for policy banks was also among the measures supporting the economy. In over-the-counter markets, weekly prices fell 5.4% for aluminum, 5.1% for nickel, 5.1% for zinc, 4.7% for lead and 2.9% for copper.
Oil and natural gas prices rise
Uncertainty surrounding the diplomatic process between the United States and Iran, as well as supply risks originating in the Middle East, affected oil prices. Fatih Birol, executive director of the International Energy Agency, said that although crude oil exports from the region had recovered significantly, refined-product shipments remained limited.
Birol noted that attacks on refineries in Russia had increased supply tightness, particularly in the diesel market. Decisions on the final trading day of the week to release energy reserves for use limited upward pressure on prices.
G7 leaders decided to release a total of 100 million barrels from oil and petroleum-product reserves within four months under the coordination of the International Energy Agency. A joint statement said a significant portion of the diesel reserves would be put on the market within the first 20 days.
US liquefied natural gas exports rose to 10.9 million tons in September, with 54% of shipments going to Europe. In the week ended September 25, US natural gas inventories increased by 64 billion cubic feet to 3.415 trillion cubic feet. Inventories being 2.4% above the five-year average supported the supply outlook.
On a weekly basis, the price of December Brent crude rose 3.5% per barrel, while the price of December natural gas rose 1.2% per million British thermal units.
Agricultural commodities move in different directions
Inventory and production data from the US Department of Agriculture, along with harvest developments, affected agricultural commodity prices. As of September 1, US corn inventories had risen 35% year over year to 2.1 billion bushels. Inventories exceeding market estimates and the progress of the harvest pressured corn prices.
Although the inventory outlook and strong export sales supported soybean prices, supply pressure from the arrival of the new crop came to the fore. In wheat, a US production estimate above expectations increased selling, while progress in the rice harvest and weak demand for US products pushed prices lower.
At the Chicago Board of Trade, prices per bushel fell 5.9% for corn, 3.2% for soybeans and 2.9% for wheat. The price of rice per 100 pounds also declined 1.4%.
In coffee, forecasts that rainfall could be insufficient during Brazil's flowering period, along with the dollar's decline on Friday, supported prices. In cocoa, the current season's surplus supply exerted pressure, while concerns that dry weather in Côte d'Ivoire could negatively affect production in the new season limited the decline.
At the Intercontinental Exchange in the United States, prices per pound rose 7.6% for sugar and 4.4% for coffee. Cotton fell 4.8%, while the price of cocoa per ton declined 0.2%.
Stay Updated with The Turkiye Times
Subscribe to be informed about special news, developments and announcements. We will keep you informed.
By signing up, you agree to our Privacy Policy
