Upward trend observed in commodity markets last week

Upward trend observed in commodity markets last week
Upward trend observed in commodity markets last week

*Writing by Gokhan Ergocun

Africa-Press – Eritrea. An upward trend continued in commodity markets last week. Despite uncertainties about the policies of the US Federal Reserve (Fed), the upward trend in commodity markets continued due to forecasts that it would end interest rate hikes after this month’s monetary policy meeting, geopolitical risks stemming from the Ukraine-Russia war, and concerns related to the increasing air temperatures.

Last week, Russia pulled out of the Black Sea grain deal, saying the Russian part of the agreement was not implemented. In a statement, the Ukrainian Agrarian Policy and Food Ministry also said that Russia targeted grain terminals and port infrastructure in Ukraine on the night of July 18 and 19.

After the weak economic data from China, the expectation that the incentives will be increased in the country also contributed to the upward trend. A mixed trend was observed in precious metals last week.

After testing the highest level since May 17 at $1,987.5, the price of an ounce of gold ended the week with an increase of 0.3%, carrying its upward trend for the third week in a row.

Silver and platinum ended the week down by 1.4% and 1.2%, respectively, while palladium gained 1.4%. Analysts said that the demand for gold, which is considered to be a safe haven, has increased due to the strengthening of the predictions that the Fed may end its hawkish steps.

The lower-than-expected growth of the Chinese economy put downward pressure on silver and platinum prices, raising concerns that demand for industrial metals would decline in the country.

Base metals

Meanwhile, a negative course became prominent last week in base metals, excluding lead. Copper decreased 2.7%, aluminum 2.3%, nickel 4.5% and zinc 1.3%, while lead gained 0.2%.

Uncertainties about the Chinese economy and concerns about global economic activity led to sales in most base metals, especially copper prices. Aluminum consumption has also seen delays due to the slow recovery of China, known as the world’s largest metal user, from the restrictions related to the COVID-19 pandemic.

A positive trend was observed on the energy side last week, with Brent oil ending the week with an increase of 1.3% and natural gas by 7.3%. The US Energy Information Administration announced that commercial crude oil stocks in the country decreased by about 700,000 barrels last week to 457.4 million barrels.

The decline in inventories of the world’s largest oil consumer pointed to an increase in oil demand. With rising air temperatures, electricity providers’ demand for natural gas to power the growing use of air conditioning has also increased.

Increased supply concerns with Russia’s withdrawal from the grain corridor agreement have led to sharp rises in the prices of agricultural commodities. Wheat’s price rose 5.4%, corn 4.5%, soybeans 2.3% and rice 2.7%. Cotton’s price increased 5.2%, sugar 1.4%, cocoa 1.9% and coffee 0.7%.

While the data on the decline in weekly rice exports in the US led to price increases, expectations of an increase in cotton demand also raised cotton prices.

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