Investors turned their interests toward commodities last week

The weakening of the possibility of a 100 basis point rate hike at the Fed’s July meeting reduced the demand for the dollar and directed investors to commodities.

In the commodity market, a positive trend was followed last week, dominated by increases.

With the statements of some hawk officials of the US Federal Reserve (Fed), the weakening of the possibility of a 100 basis point interest rate hike at the July meeting reduced the demand for the dollar and directed investors to commodities.

A positive trend was also observed in the global stock markets, with the majority of the company’s profitability announced in the USA last week exceeding expectations.

While it is priced in the money markets that the Fed will increase interest rates by 75 basis points with an 80% probability in July, it is predicted that the bank will increase interest rates by 50 basis points with a 51% probability and by 75 basis points with a 40% probability at the September meeting.

With these developments, the ounce price of gold ended the downward trend for five consecutive weeks and rose to $1,722 with a 0.8% gain last week. Last week, palladium gained 10.7% and platinum 2.8%.

While the upward trend was dominant in metals, last week, copper gained 3.5%, aluminum 4%, lead 2.7%, zinc 2.5% and nickel 14.2% in the over-the-counter market.

There was also an upward trend in energy commodities

Last week, there was an upward trend on the energy side as well. Brent oil gained 1.2% and natural gas traded on the New York Mercantile Exchange gained 18.3%.

The weakening dollar index and concerns about the contraction in supply were effective in the rise in prices.

Speaking at the Jeddah Security and Development Summit, which was held with the participation of US President Joe Biden and leaders from 9 Arab countries, Saudi Arabian Crown Prince Bin Salman stated that his country had decided to increase oil production to 13 million barrels a day, as it had previously announced, and that they would not have any additional capacity.

The Crown Prince did not reveal a timetable for Saudi Arabia’s plan to increase oil production by more than 1 million barrels to 13 million barrels per day. However, Saudi Arabian Energy Minister Abdulaziz bin Salman had pointed to the beginning of 2027 for this target in his statement in May.

Strong demand signs in Asia and data showing that gasoline demand in India rose to record levels in June despite high prices also supported the upward movement in prices.

Natural gas prices, on the other hand, were affected by the increasing air temperatures in the USA, which increased the demand for natural gas-operated air conditioners, despite the reduction of concerns about supply with the start of gas flow from the Nord Stream 1 pipeline, which carries Russian gas from the Baltic Sea to Germany.

Agricultural commodities followed a mixed course

Last week, on the agricultural side, a mixed course was observed. Wheat traded on the Chicago Mercantile Exchange fell by 2.3%, corn 6.8%, soybeans 2%, while rice increased by 2.1%.

With the agreement signed between Turkey, Russia, Ukraine and the United Nations (UN) hosted by Turkey, which will ensure the safe shipment of grains and foodstuffs from Ukraine, significant decreases were seen in wheat and rice with the decrease in concerns about supply.

Increasing concerns about production due to global heat, on the other hand, caused an increase in rice prices.

Last week, cotton increased by 2.8%, coffee by 3.5%, sugar by 4.7% and cocoa by 1%.

The increase in reaction purchases after the decline in the dollar index caused an increase in cotton prices. The increase in coffee exports in Brazil also affected coffee prices positively. The interest rate hikes by the world’s leading central banks continued to negatively affect the sugar market.

Source: Trthaber / Translated by Irem Yildiz

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