Global Commodity Markets Experience Volatility Amid Election Uncertainty and Economic Concerns
Prices fell across a range of commodity sectors, including precious metals, base metals, and agricultural products.
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Commodity prices were battered last week as investors scrambled to navigate the uncertainty surrounding the US presidential election, concerns about China's economic growth, and increased agricultural production in Brazil.
As central banks around the world near the end of their fight against inflation, expectations for interest rate cuts are becoming increasingly clear. The uncertainty surrounding the election outcome has added to market volatility, with some commodities experiencing sharp declines.
Gold Prices Reach Record High Before Falling
Gold briefly hit a record high of $2,483 as expectations grew that the Federal Reserve would start cutting rates in September. However, it subsequently fell to $2,400 as demand for the US dollar increased. Analysts noted that a potential re-election of Trump could disrupt green energy investments, leading to fluctuations in silver and copper prices.
Commodity Performance
Last week, gold lost 0.4%, silver fell 5.1%, platinum dropped 3.9%, and palladium decreased 6.5%. Base metal prices were pressured by Chinese economic data, which showed a slower-than-expected GDP growth rate and retail sales.
Copper prices fell 8.1%, lead dropped 3.8%, nickel decreased 3.5%, and aluminum slid 14.9% as the Chinese government has yet to implement expected economic reforms.
Agricultural commodities also saw significant declines, with rice prices falling due to India's decision to lift restrictions on rice exports, easing supply concerns. Corn prices declined due to demand concerns amid falling oil prices. The bushel price of wheat traded on the Chicago Mercantile Exchange fell 1.1%, corn dropped 2.2%, soybeans fell 2.8%, and rice decreased 2.7%.
Coffee prices fell as production concerns eased with increased rainfall in Brazil, while cotton and sugar prices also declined. Cocoa prices dropped significantly amid reduced supply concerns due to improved weather conditions in West Africa.
In terms of specific commodity prices, the pound price of cotton traded on the Intercontinental Exchange fell 0.7%, sugar dropped 2.8%, and coffee decreased 4.2%. The ton price of cocoa ended the week down by 7%.
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