Commodity markets rise despite Fed announcements, geopolitical tensions


(MENAFN) Supply worries and optimism stemming from China have buoyed commodity markets, despite the adverse effects of announcements from the Federal Reserve, sanctions, and ongoing geopolitical tensions.

Concerns persist regarding the timing of potential interest rate cuts by the Federal Reserve, and the minutes from the recent Federal Open Market Committee (FOMC) meeting indicate that bank officials are wary of swiftly implementing monetary policy easing. They are deliberating over the possibility that achieving further progress in controlling inflation might require more time than initially anticipated.

"Most participants noted the risks of moving too quickly to ease the stance of policy and emphasized the importance of carefully assessing incoming data in judging whether inflation is moving down sustainably to 2 percent," the report said. However, some bank officials mentioned that lowering risks too quickly may introduce upside and downside risks.

Consequently, the likelihood of the Federal Reserve commencing interest rate cuts in May decreased to 25 percent, while the probability for June also declined to 67 percent.

Investors gravitated towards "safe haven" commodities, leading to a surge in the price of gold to USD2,036. This shift was prompted by the declining trend in the US Dollar Index and persistent tensions in the Middle East.

In the US, the average interest rate for a 30-year mortgage surpassed 7 percent once more, reaching its highest level since December 2023, at 7.06 percent.

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