Fed rate cuts, geopolitical risks, US sanctions, and China's economic moves drive commodity prices upward in January-September
Commodity markets experienced a bullish trend in the first nine months of 2024, recovering from last year's selling pressure. Key drivers behind this upward shift included interest rate cuts by the US Federal Reserve and other central banks, China's economic policies, and rising geopolitical risks.
Expectations of China retaliating against US sanctions and global climate events were among the significant factors pushing commodity prices higher throughout the year.
Analysts suggest that the likelihood of further Fed rate cuts could continue to support commodity prices in the coming months.
Some commodities, however, faced price declines due to uncertainties surrounding the upcoming US presidential elections, concerns about China's economy, and unfavorable weather conditions.
Despite the overall bullish trend, fears of a sharper-than-expected slowdown in US economic activity and related historic selling pressure in global markets caused price divergences across various commodities.
- Gold shines amid geopolitical tensions
Gold prices surged by 27.7% in the first nine months of the year as investors sought safe-haven assets amid tensions in the Middle East. Continued gold purchases by central banks also contributed to the price rise.
Analysts forecast that the price of gold could climb to $2,900 per ounce, driven by the Fed's rate cuts, ongoing central bank purchases, and gold's increased appeal as a safe-haven asset. Low interest rates, which reduce the opportunity cost of holding non-interest-bearing assets like gold, further support this trend.
Silver prices also posted a strong gain of 31% from January to September, with analysts predicting the price could reach $40 per ounce next year. Palladium prices are expected to rise alongside other economically sensitive commodities.
Meanwhile, platinum prices fell 1.2%, and palladium dropped 8.8% over the same period.
Copper prices rose 17.6% to a record high of $2,685.61 per pound, while aluminum gained 9.4%, nickel 7%, and zinc 16%.
- Recession concerns weigh on Brent crude oil prices
Brent crude oil prices fell 6.5% per barrel in the first nine months of the year despite ongoing tensions in the Middle East and concerns over Hurricane Beryl. Stockpiles built in response to the storm helped prevent a price rise, while recession fears also weighed on the market.
Natural gas prices, however, saw a 16.3% increase on the New York Mercantile Exchange due to rising exploration costs, emerging supply problems, and declining production. Demand for liquefied natural gas (LNG) in the US also contributed to the price surge.
- Agricultural commodities face mixed trends
In agricultural markets, wheat prices dropped 7% per bushel on the Chicago Mercantile Exchange, reaching their lowest level since August 2020 at $5.1425. The decline was attributed to easing production concerns in the US and expectations of reduced tensions from the Russia-Ukraine War.
The availability of cheap Russian wheat and reports that China might cancel some US wheat purchases further pressured prices. Additionally, rainfall in dry regions of Russia and Ukraine helped alleviate supply concerns.
Corn prices decreased by 9.9%, hitting their lowest level since October 2020 at $3.85 per bushel, as a surge in US deliveries drove prices down. Unfavorable weather conditions in Ukraine and Russia also contributed to the price drop.
Soybean prices fell 18.6%, while rice declined 2.1% during the same period.
- Cocoa, coffee see significant gains
Cocoa prices soared 84% in the first nine months of the year, peaking at $11,722 per ton, while coffee prices rose 43.5%, reaching their highest level since September 2011 at $2.7505 per pound.
Sugar prices increased 9.2%, while cotton fell 9.1% on the Intercontinental Exchange.
