Commodity Market Experiences Rally Week

The commodity market witnessed significant surges last week, driven by increasing expectations of a interest rate cut by the US Federal Reserve (Fed) in the first half of the year and macroeconomic data from China indicating a rise in demand.

Analysts noted that the statements of Fed Chairman Jerome Powell, assuring that they are not far from the confidence required to ease monetary policy, significantly influenced commodity prices.

Additionally, non-farm employment in the United States increased by 275,000 in February. The unemployment rate rose from 3.7% to 3.9%, reaching its highest level in two years. Despite the higher-than-expected increase in employment, analysts pointed out that the rise in unemployment and the slowdown in wage increases support the possibility of the Fed starting interest rate cuts in the first half of the year. China’s foreign trade data also revealed an increase in demand in the commodity market.

In February, exports in the country surpassed predictions with a 7.1% annual increase, while imports increased by 3.5%.

Gold reached a historic high last week, hitting $2,195, and saw a 4.6% increase in its ounce. Silver gained 4.9%, platinum 2.6%, and palladium 6.7%.

Analysts highlighted that Powell’s “dovish” remarks and the employment data released in the US supported the demand for gold.

The announcement by the World Platinum Investment Council (WPIC) that the global platinum deficit in 2024 would be deeper than expected led to an increase in platinum prices.

Ending the week, Brent crude oil experienced a 2% decrease, while natural gas traded on the New York Mercantile Exchange saw a 1.4% decrease. Brent crude oil prices recorded a decline following data indicating reduced demand in the United States, the world’s largest oil consumer.

According to data released by the US Energy Information Administration (EIA), commercial crude oil inventories in the country increased to 448.5 million barrels, a rise of approximately 1.4 million barrels from the previous week. The market expectation was an increase of 423,000 barrels. Mild temperatures above seasonal norms and surplus supply in the US influenced natural gas prices downward.

While copper prices rose, aluminum remained flat. In the over-the-counter market, copper increased by 0.8%, lead by 3.4%, nickel by 2%, and zinc by 3.8%, while aluminum remained stable.

News suggesting a reduction in copper smelter production in China raised concerns about supply. Additionally, China’s increase in total unprocessed copper imports indicated a rise in copper demand.

Nickel prices rose following news that an Indonesian nickel producer had applied to list its produced nickel as a delivery brand on the London Metal Exchange.

Signs of tightening supply in China and increased demand for zinc positively impacted zinc prices. Support for prices also came from a report stating that South Korean mining company Young Poong Corp. reduced refined zinc production at its Seokpo smelter.

Cocoa prices reached a historic peak. In the agricultural group, wheat prices traded on the Chicago Mercantile Exchange fell by 3.5%, rice by 3.9%, corn increased by 3.5%, and soybeans rose by 2.9%.

Wheat hit its lowest level since August 2020, reaching $5.2600. The price of cotton traded on the Intercontinental Exchange fell by 0.3%, while cocoa rose by 1.1%, coffee by 1%, and sugar by 0.4%. Cocoa reached a historic high of $6,677.

Reports of cheap Russian wheat and news that China may cancel some wheat purchases from the US adversely affected wheat prices. Increased soybean exports in Brazil indicated a growing demand for soybeans.

source: prepared by Melisa Beğiç

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