Commodity prices drop last week over decreasing demand from China
Date
10/23/2024 6:01:44 AM
(MENAFN) Commodity prices experienced a decline last week, primarily driven by decreasing demand from China, although precious metals saw significant gains due to rising expectations for central bank interest rate cuts amid ongoing geopolitical tensions. Gold prices surged by 2.4 percent, reaching USD2,721.40 per ounce, as investors sought safe-haven assets amid escalating tensions in the Middle East. Central banks are gradually shifting away from their two-year tightening policies while maintaining their gold purchases, enhancing the metal's attractiveness.
Analysts attribute gold's increased appeal to heightened risk perception from geopolitical conflicts, despite the strengthening US Dollar Index and rising bond yields. The uncertainty surrounding the upcoming US presidential elections on November 5 could further propel gold prices, with members of the London Bullion Market Association predicting new record highs within the next year. Similarly, silver prices climbed by 8.2 percent to USD33.71 per ounce, supported by better-than-expected growth data from China, while platinum and palladium rose by 2.9 percent and 1.8 percent, respectively.
In contrast, base metals faced a downturn due to concerns about demand from China. The recently announced stimulus package for the real estate sector did not meet expectations, leading to price drops in copper (2.3 percent), aluminum (0.8 percent), lead (1.1 percent), nickel (5.1 percent), and zinc (2 percent). In the energy sector, OPEC projected an increase in global oil demand of 1.9 million barrels per day for this year, but next year’s forecast was adjusted downward by 100,000 barrels due to expected slowdowns in Chinese demand. The International Energy Agency (IEA) also reported a 660,000 barrels per day increase in global oil supply for this year, contributing to a 7.3 percent decline in Brent crude oil prices last week.
Natural gas prices on the New York Stock Exchange fell by 14.5 percent per British thermal unit (MMBtu) due to predictions of above-average temperatures. In agricultural commodities, corn and soybean prices dropped by 2.7 percent and 3.5 percent, respectively, resulting from an oversupply in the US linked to record-high production estimates. Coffee prices, however, increased by 1.4 percent per pound due to concerns over production related to below-average rainfall in Brazil. Sugar prices fell by 0.5 percent amid optimism for ample harvests in India, while cocoa prices decreased by 4 percent per ton due to expectations of higher production in the Ivory Coast. Additionally, cotton prices dropped by 2 percent per pound, wheat prices fell by 4.3 percent per bushel, and rice prices remained stable.
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