After weeks of selling pressure, commodities experienced gains last week.
The news flow suggesting that the Chinese government would announce new stimulus packages to revive the economy supported risk appetite in the commodity market last week.
The strengthening of “soft landing” scenarios in the U.S. economy and reduced recession concerns also positively influenced asset prices.
The Purchasing Managers’ Index (PMI) for the manufacturing sector in the United States reached 50.3 in January, the highest figure in the last 15 months, surpassing expectations. This data indicated a return to the expansion zone in the manufacturing industry.
While economic activity continued to be strong in the country, the U.S. gross domestic product (GDP) showed a year-on-year increase of 3.3% for the October-December 2023 period, exceeding expectations.
Despite the upward trend in the commodity market, gold continued its downward trend last week. While the ounce of gold lost 0.5%, silver gained 1%, platinum gained 1.2%, and palladium gained 0.8%.
Concerns that central banks’ dovish steps might be delayed continued to weigh on the price of gold. The news of India raising taxes on silver imports highlighted concerns about cost pressures, boosting silver prices.
Looking at base metals, copper, lead, aluminum, nickel, and zinc all rose in the over-the-counter market last week, with copper leading the way with a 1.8% increase.
Analysts pointed out that there is a copper deficit in the physical market. Analysts also noted that China’s significant consumption of copper in 2023 indicates strong demand.
Despite the weakening construction market in China, the country is demanding copper for military and national security purposes. Besides China, Europe and India are also turning to copper to be effective in areas such as green economy, environmental, social, and corporate governance.
Concerns about the European Union (EU) imposing new sanctions on Russian aluminum led to an increase in aluminum prices.
The energy group also made a significant contribution to the positive trend in commodity prices last week.
Brent crude ended the week with a 6.2% gain, and natural gas traded on the New York Mercantile Exchange recorded a 7.9% gain.
Oil prices rose due to data showing an increase in oil demand in the United States, the world’s largest consumer of oil, and signs of economic recovery in China.
According to the official stock data of the U.S. Energy Information Administration (EIA), the country’s commercial crude oil stocks decreased by approximately 9.2 million barrels in the previous week. The expectation was for a decrease of 3 million barrels in stocks. The unexpected drop in stocks, indicating high demand in the United States, supported oil prices.
Analysts predict that this situation could reduce deflationary pressure in the country, thereby feeding risk appetite.
Concerns continue to grow that tensions in the oil-rich Middle East could disrupt global oil supply. The Iran-backed Houthi rebels in Yemen reported hitting a U.S. warship in the Red Sea and forcing two commercial ships to turn back. Houthi Military Spokesman Yahya Seri stated that they would continue their attacks in the Red Sea.
The International Energy Agency (IEA) also indicated that global natural gas demand could experience a strong increase of 2.5% this year, stating that geopolitical risks and concerns about the supply side could create volatility in prices.
Cocoa prices continued to reach new highs due to concerns from Ivory Coast and Ghana A positive trend was observed in the agriculture group last week.
While wheat prices traded on the Chicago Mercantile Exchange increased by 1.2%, corn increased by 0.2%, rice increased by 1.8%, and soybeans decreased by 0.3%.
Cotton traded on the Intercontinental Exchange, a commodity exchange based in the United States, increased by 2.2%, coffee by 4.5%, sugar by 2%, and cocoa by 2.3%. Cocoa hit a peak of $4,840 per ton.
Wheat gained value due to geopolitical risks from the Middle East and the Red Sea, and predictions that demand could increase in North America and Europe.
News that China plans to increase soybean cultivation to support the country’s food security led to a decrease in soybean prices.
Ongoing attacks by Houthi rebels in the Red Sea, slowing coffee shipments from Asia to Europe, and supply issues in Vietnam, especially, continued to support coffee prices.
Cocoa prices continued to reach new highs last week due to the ongoing deterioration in the supply outlook in Ivory Coast and Ghana.
source: aa.com.tr / prepared by Melisa Beğiç