London: Commodity prices experienced a significant surge last week as ongoing geopolitical tensions and economic uncertainties, notably the strengthening US Dollar Index, created a challenging environment for market estimates. Concerns have grown regarding the potential for prolonged inflationary pressures, as indicated by fluctuating expectations about the Federal Reserve’s rate cut decisions.
According to Anadolu Agency, some officials from the Federal Reserve have cautioned that the recovery period for inflation may stall, as the probability of a rate cut next month in the money markets has decreased from 82% to 52%. Meanwhile, Russia’s threats of nuclear retaliation on Ukraine, following Ukraine’s deployment of US-supplied long-range missiles, have led to increased demand for safe-haven commodities, particularly gold. Gold prices rose by 6% per ounce last week, marking the most substantial weekly increase since March 2023.
Analysts from UBS, a Swiss investment bank, have suggested that central banks may
adopt more moderate monetary policies in response to inflationary pressures and slowing economic growth. They predict that gold prices will continue to rise into 2025. Concurrently, the US Dollar Index reached a two-year high, impacting various commodity prices.
Silver experienced a 3.6% increase following the UN’s pledge to allocate $300 billion annually for climate change initiatives at the COP29 climate action event in Baku, which is expected to significantly influence the silver market. Palladium surged by 6.1% after discoveries by Earth AI and Legacy Minerals revealed one of Australia’s largest palladium mineral systems, while platinum rose by 2.3%.
In the base metals sector, aluminum prices climbed 0.9% per pound after China’s Finance Ministry announced the elimination of a 13% tax rebate on aluminum exports effective December 1, potentially withdrawing over 5 million tons of Chinese aluminum annually from international markets. Copper prices also increased by 0.6% following China’s decision. Nickel r
ose by 0.8% as Indonesia boosted its nickel ore supply to protect local miners, with lead and zinc also seeing modest gains of 0.5% and 0.6%, respectively.
In the energy sector, escalating tensions between Russia and Ukraine, coupled with Russia’s hypersonic missile testing, have raised concerns about possible damage to oil, gas, and refinery infrastructures. The US has imposed new sanctions to curb Russian gas exports, while India’s oil imports have grown due to rising domestic consumption. Consequently, Brent crude oil prices soared by 5.20% per barrel, and natural gas prices on the New York Mercantile Exchange surged by 14.40%.
In the agricultural sector, wheat prices rose by 1.9% per bushel as US and Black Sea farmers stored their harvests due to declining prices, leading to increased demand. The US Department of Agriculture forecasts that global wheat stocks may reach a nine-year low by mid-next year. Soybeans increased by 1.4%, rice by 3.7%, and corn remained stable on the Chicago Mercantile Exchange.
Coffee prices reached an all-time high with a 5.9% increase, while cotton rose by 2.2% per pound. Cocoa prices soared by 5.4% per ton, while sugar decreased by 1% per pound during the same period.