Commodity markets see significant instability from January to August of this year

(MENAFN) Commodity markets experienced significant volatility from January to August of this year, with sharp fluctuations across various sectors. Among the most notable movements were the rises in gold and silver prices, which emerged as highly profitable commodities amid a turbulent market environment. This volatility was driven by several factors, including uncertainties surrounding the upcoming US presidential and congressional elections, economic concerns related to China, and supply disruptions caused by adverse weather conditions.

Despite these challenges, there was a notable upward trend in commodity prices. Positive forecasts for potential Federal Reserve interest rate cuts, US sanctions on China, and China's own efforts to bolster its economy contributed to this trend. Additionally, anticipated retaliatory measures from China against US sanctions further influenced market dynamics. In this context, gold prices benefited from its status as a safe-haven asset, particularly as geopolitical tensions in the Middle East heightened. Central banks also played a significant role in driving up gold prices, with their purchases reaching a record high of 483 tons in the first half of the year and doubling to 37 tons in July alone.

Silver prices also saw an increase, driven by strong US macroeconomic data, a global slowdown in mining production, and a supply-demand imbalance. The gold-to-silver ratio, which had been around 92 throughout the year, decreased to 88 as economic activity concerns eased. Consequently, gold and silver prices saw substantial gains, with gold reaching a record high of USD2,531 per ounce from January to August, marking a 21.3 percent increase. Silver prices also surged, reaching USD32.5 per ounce, their highest level since December 2012.

Ole Hansen, head of commodities at Saxo Bank in Denmark, highlighted that geopolitical risks, including the Russia-Ukraine War and Middle Eastern conflicts, as well as the upcoming US elections, were major factors influencing gold and silver prices. Hansen noted that demand from China was driven by issues in the country's real estate sector, which led investors to seek safer assets. Gold, in particular, provided stability amid geopolitical uncertainties and reduced reliance on the dollar, further bolstering its appeal.

MENAFN12092024000045015839ID1108665459