(MENAFN- AzerNews) Commodity markets were dominated by downward pressure last week,as demand for the US dollar hiked amid concerns that the Fed maycut rates later than other central banks, Azernews reports, citing Anadolu Agency.
Interest rate decisions of central banks influenced commoditymarkets.
The Fed left its policy rate unchanged within expectations,leaving it at a 23-year high of 5.25% to 5.50%, while expectationsfor three rate cuts this year remained high.
Meanwhile, the Swiss National bank (SNB) cut its policy rate to1.50%, which came as a surprise for investors and caused the USdollar index to rise after the Fed decided to keep interest ratesunchanged.
The rise of the US dollar against other currencies put downwardpressure on commodity prices, analysts say.
Gold price hits historic high
The Bank of Japan's (BoJ) first interest rate hike in 17 yearsnegatively impacted precious metal prices, as the bank raised itsshort-term interest rates from minus 0.1% to a range of 0% to 0.1%last week.
Silver prices fell as US data continued to signal that thecountry's economic activity remains strong, with the USPhiladelphia Fed Manufacturing Index revealing that the sectorcontinues to expand, as the index gained a positive value for thesecond consecutive month, although it fell to 3.2 in March.
The current US account deficit decreased by 15.7% last year to$818.8 billion.
The US Purchasing Managers' Index (PMI) for the manufacturingindustry rose 0.3 points month-on-month to 52.5 in March, hitting a21-month, exceeding market expectations, and indicating that themanufacturing sector is expanding. As for the Services PMI in theUS, the index fell 0.6 points month-on-month in March to 51.7.
Existing home sales in the US exceeded expectations in February,increasing by 9.5%, the highest increase this year.
Platinum and palladium prices fell due to the increasing demandfor electric vehicles, as the demand for catalytic converters usedin conventional vehicles decreased.
The ounce price of gold reached a new peak of $2,222.8 as theFed maintained its forecast of three rate cuts by the end of theyear.
In light of these developments, the ounce price of gold rose0.4% last week, while silver fell 1.9%, platinum 4.4%, andpalladium 8.5%.
Copper price fell from its 13-month high
Base metals were under selling pressure last week, as the copperprice per pound, which reached its highest level since Feb. 2023 at$4.14, fell from its 13-month high and finished the week down3%.
The price of aluminium per pound hiked by 1.6, while nickel,zinc, and lead all fell by 3.1%, 3%, and 4.8%, respectively.
The energy sector experienced price increases last week.
Last week, Brent crude oil prices rose due to geopoliticaltensions and supply concerns as Ukraine's attack on Russia's oilrefineries raised fears that fuel supplies to Asia and Europe wouldbe disrupted.
Meanwhile, rising tensions in the Middle East continue to putupward pressure on prices, with concerns that the region's ongoingconflicts will disrupt the oil supply.
Yemeni Prime Minister Ahmad Awad bin Mubarak announced thesuspension of the UN roadmap, which was announced by HansGrundberg, the UN special envoy for Yemen, to establish acease-fire with the Iranian-backed Yemeni group Houthis, due toescalating tensions in the Red Sea.
The Houthis continue to target Israeli-linked vessels passingthrough the Red Sea.
The group announced that they had carried out an attack using aUS-made unmanned aerial vehicle (UAV), and a few days later, US andUK forces conducted 10 attacks on the western city of Al Hudaydahin Yemen.
The projected decline in commercial crude oil stocks in the USstrengthened the perception that demand remained strong, givingrise to Brent crude oil prices.
Contrary to expectations, the American Petroleum Instituteannounced that the US commercial crude oil stocks fell by 1.5million barrels compared to the previous week. The market expectedstocks to rise by 77,000 barrels.
US commercial crude oil inventories exceeded expectations andfell by about 2 million barrels last week. Markets expected stocksto decrease by 900,000 barrels.
Natural gas demand in the US increased as temperatures areexpected to fall.
Given these changes, the barrel price of Brent crude oil hiked0.2%, while natural gas traded on the New York Mercantile Exchangein British thermal units (MMBtu) rose 2.2%.
Agricultural group see mixed course, while cocoa reaches newhigh
Wheat and corn prices soared on news that the EU will tax grainimports from Russia and Belarus.
Meanwhile, news that Thailand planned to ban corn imports fromneighboring countries that pollute the air by burning agriculturalland, as well as the Buenos Aires Grain Exchange's downgrade ofArgentina's corn production forecast from 56.5 million tons to 54million tons for the 2023/24 season, pushed corn prices higher.
Considering this news, the price of wheat traded on the ChicagoMercantile Exchange rose 5.3%, corn 0.6%, whereas soybeansdecreased 0.5%, and rice fell 2.7%.
Reduced rainfall in Brazil has raised concerns about coffeeproduction.
Sugar prices fell due to increased production in Brazil, whilethe Brazilian real depreciation against the US dollar had anegative impact on sugar prices.
Concerns about cocoa supply in West Africa persist, as adverseweather conditions in the region and import restrictions imposed byEuropean importers impacted cocoa prices.
Last year, harsh growing conditions and crop diseases in WestAfrica hampered cocoa production, driving prices higher.
The global deficit is expected to continue as current cocoaproduction is insufficient to meet demand.
Following the 2016 El Nino weather phenomenon, which causeddrought and a sharp rise in cocoa prices, rates are again on therise as a result of the current El Nino.
The price of cocoa peaked at $8,960 per ton, up 10.7% lastweek.
In light of these developments, the price of cotton on theIntercontinental Exchange fell 1.8%, sugar 0.7%, and coffee1.2%.
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