Commodity prices see fluctuations over Fed uncertainty, international tensions
Date
10/28/2024 9:33:24 AM
(MENAFN) Commodity prices experienced significant fluctuations last week, influenced by the Federal Reserve's signals of a delayed rate cut trajectory, uncertainties tied to the upcoming U.S. presidential election, and rising global tensions. Heightened demand for the U.S. dollar followed these developments, alongside a 4.25 percent increase in U.S. 10-Year Treasury Futures after the Fed implemented a 50-basis-point rate cut. Analysts believe the Fed may take a cautious approach on future rate cuts given positive economic data, prompting many investors to hold off on decisions until after the election.
Gold, as a safe-haven asset, reached a record price of USD2,758.5 per ounce, marking a 1 percent increase driven by expectations for a soft U.S. economic landing and heightened Middle East tensions. Analysts predict gold could climb to USD3,000 per ounce in 2025, as ongoing rate cuts may diminish demand for the dollar, indirectly supporting gold prices. In contrast, palladium surged 10.4 percent per ounce, fueled by speculation over potential U.S. sanctions on Russian palladium and titanium exports.
The strong dollar placed downward pressure on base metals, yet zinc prices edged up 0.5 percent per pound following a 12 percent production cut by Teck Resources after a smelter fire. Aluminum saw a 2.5 percent increase as China’s 25-basis-point cut in its Loan Prime Rates raised demand expectations. Copper and lead, however, declined by 0.5 percent and 1.3 percent, respectively.
Oil and gas markets also reacted to geopolitical developments, with Brent crude oil rising 3.7 percent and natural gas jumping 11.8 percent on the New York Mercantile Exchange due to colder weather forecasts and lower-than-expected supply levels. Agricultural commodities saw mixed trends: corn and soybeans rose 2.7 percent and 2.9 percent, respectively, amid drought concerns in Russia and Ukraine, while wheat dipped 0.6 percent and rice rose 0.5 percent. Coffee and sugar prices fell 3.5 percent and 0.4 percent, respectively, due to anticipated rainfall in Brazil and a weaker Brazilian real, while cocoa plummeted 15 percent with increased rain in key cocoa-producing nations, Ivory Coast and Ghana. Cotton prices also dropped 0.4 percent per pound.
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