Commodity prices surge amid geopolitical tensions, financial incentives from China


(MENAFN) Commodity prices experienced an upward trend last week, influenced by geopolitical tensions and economic incentives from China, though the extent of gains varied by product category. A three-day strike by US dock workers over wage disputes and automation concerns heightened supply worries, contributing to price increases in several commodities.

In financial markets, remarks from Federal Reserve Chairman Jerome Powell and recent US employment data suggested that significant rate cuts are unlikely in the near term. While analysts anticipate a potential 25-basis-point cut in November, this expectation pressured gold prices, which fell by 0.2 percent to end the week. Powell indicated that the Fed is not in a rush to make further cuts, stating that a cooling labor market might not be required, with two additional cuts totaling 50 basis points expected by year-end.

China's new economic stimulus measures affected base metals, resulting in most prices rising except for copper, which dropped 0.6 percent due to increased demand for the US dollar. Aluminum prices increased by 0.8 percent, while lead rose by 1.7 percent, nickel surged by 5.3 percent, and zinc climbed by 2.8 percent per pound. Silver notably surged by 1.9 percent last week, reaching USD32.95 per ounce, the highest price since December 2012, driven by ongoing concerns over a global silver deficit. Platinum and palladium also saw gains of 1.3 percent and 0.1 percent, respectively.

In the energy sector, tensions in the Middle East, particularly Iran's response to Israel regarding the assassinations of Hezbollah and Hamas leaders, heightened global supply concerns, leading to an 8.3 percent increase in Brent crude oil prices. Natural gas prices on the New York Mercantile Exchange fell by 2.5 percent per British thermal unit (MMBtu). Agricultural commodities experienced mixed performance, partly due to reports that the European Union may delay implementing new rules on imports of products like soybeans and cocoa, which come from environmentally sensitive areas. Sugar prices rose by 1.6 percent per pound, while coffee and cocoa prices dropped significantly, with cocoa falling by 14.7 percent per ton. Wheat, corn, and rice saw modest increases, while soybeans declined by 2.6 percent.

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