Commodity markets flourish with significant increases last week

(MENAFN) Last week, commodity markets experienced significant positive movements, driven by growing expectations of a 50-basis-point rate cut by the Federal Reserve. This sentiment was bolstered by recent statements from former Fed official William Dudley, who suggested that such a cut might be feasible. While markets also considered the possibility of a more modest 25-basis-point cut, the retreat in bond yields and the US Dollar Index contributed to the upward trend in commodity prices. Analysts are now closely watching the Fed's upcoming monetary policy decision and remarks from Fed Chairman Jerome Powell for further direction.

In the bond market, the US 10-Year Treasury yield fell by 7 basis points to 3.65 percent, and the US Dollar Index declined by 0.1 percent to 101.1. These changes reflect a broader shift in market expectations and conditions. Additionally, the number of initial unemployment benefit claims in the US rose slightly by 2,230, marginally exceeding market expectations. This increase in claims has supported the anticipation of dovish policy actions by the Fed, while the European Central Bank’s interest rate cuts have positively impacted precious metal prices.

Silver prices surged by 9.9 percent last week, influenced by Vice President Kamala Harris's commitment to diversifying energy sources, which is seen as reducing foreign dependency. Meanwhile, palladium and nickel prices rose by 17 percent and 0.3 percent, respectively, following Russian President Vladimir Putin’s hints at possible export restrictions. Platinum prices also saw an 8 percent increase after the World Platinum Investment Council's report indicated a projected deficit of 1 million ounces in the second quarter.

In the metals sector, copper prices rose by 4.1 percent due to falling stocks in Shanghai and decreased production in Chile. Aluminum prices climbed 5.5 percent as a result of reduced stocks in China and strong demand for renewable energy. In the energy sector, Brent crude oil prices increased by 0.5 percent amid disruptions caused by Hurricane Francine in the Gulf of Mexico. This storm also affected natural gas production, leading to a 0.8 percent rise in natural gas prices. Additionally, sugar prices rose 2.7 percent, driven by recovering oil prices and anticipated demand, while coffee and cocoa prices surged due to production issues and rising global demand. Wheat, corn, soybeans, and rice prices also saw increases on the Chicago Mercantile Exchange, with cotton prices rising by 3.7 percent on the Intercontinental Exchange.

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