In the week that ended in commodity markets, expectations that the US Federal Reserve (Fed) may continue to increase interest rates and the selling pressure from technology stocks dragged precious metals down, while supply developments and geopolitical risks also had an impact on other commodities.
The Fed, which is at the center of the markets, kept its policy rate constant at 3.75-4 percent. The bank stated that inflation remained high and that the data to be announced in the coming period would be effective in determining the direction of monetary policy.
The US economy grew by 3.4 percent on an annualized basis in the third quarter. In September, the country's personal consumption expenditures (PCE) price index increased by 0.5 percent monthly and 3.6 percent annually, while the core index excluding food and energy increased by 0.3 percent monthly and 3.1 percent annually.
The ounce of gold fell to the lowest level in a year
In precious metals, the fact that economic activity in the USA remained strong and inflation remained above the target supported the expectations that the Fed may increase interest rates again in December.
The effect of high energy prices on inflation was also a determining factor in pricing. Expectations that interest rates may remain for a long time have put pressure on gold and other precious metals that do not bear interest.
In his press conference on Wednesday, Fed President Kevin Warsh pointed out that inflation has been above the target for about 6 years and emphasized that the responsibility for ensuring price stability belongs to the bank.
Stating that financial conditions have become tighter, but he cannot describe them as tight yet, Warsh refrained from giving guidance regarding the decision of the next meeting.
The decline in technology stocks on the last trading day of the week also brought sales to precious metals.
Analysts stated that investors may have sold gold to meet increased collateral needs due to losses in other markets.
While the US 10-year bond interest rate decreased by 7 basis points on a weekly basis to 4.93 percent, the dollar index remained flat at 101.9. The retreat in bond yields was not enough to prevent the weekly loss in gold.
The ounce price of gold completed the week at 3 thousand 876 dollars, after hitting its lowest level in a year at 3 thousand 870.3 dollars during the week.
While silver dropped below $50 per ounce on Friday after nearly 11 months, the steepest weekly loss among precious metals was in silver.
With these developments, prices on an ounce basis in precious metals decreased by 9 percent for silver, 7.8 percent for platinum, 6.4 percent for palladium and 3 percent for gold.
Supply developments in base metals differentiated prices
Signs of tight physical supply of base metals coincided with concerns about industrial demand.
In zinc, the decrease in stocks outside China and the increase in near-term delivery premiums supported prices. Analysts stated that the limited ore supply in China and the decline in stocks were also effective in the rise.
Low stock exchange stocks of aluminum and demands to withdraw the metal from warehouses kept short-term supply concerns alive.
Production in Indonesia came to the fore on the nickel supply agenda. French mining company Eramet announced in its results on Thursday that Weda Bay Nickel in Indonesia has updated its nickel ore sales target upwards for this year.
While physical demand and short-term supply congestion in China provided support for copper prices, concerns about the return on artificial intelligence investments suppressed expectations for industrial metals. The increase in the Yangshan premium, which indicates China's demand for imported copper, to 205 dollars per ton, pointed out the tightness in the physical market.
In the over-the-counter market for base metals, prices on a pound basis increased by 2.4 percent in zinc and 0.7 percent in aluminum during the week, while they decreased by 4 percent in nickel and 0.1 percent in lead. Copper, on the other hand, remained horizontal.
An increase was observed in the energy group
In the oil market, the news flow regarding attacks in the Middle East and diplomatic initiatives had an impact on the direction of prices.
The attack on a tanker in the Strait of Hormuz and the statement by Yemen's Houthis that they were targeting energy facilities in Saudi Arabia increased concerns about oil supply. Qatar's mediation attempts kept the expectations for a diplomatic solution on the agenda.
The increase in the amount of US natural gas sent to liquefied natural gas (LNG) export facilities and the upward revision of demand forecasts during the week supported prices.
However, with the November natural gas contract expiring on Wednesday, the higher priced December contract became the closest futures contract.
According to data published by the US Energy Information Administration on Thursday, natural gas stocks increased by 80 billion cubic feet in the week ending October 23, reaching 3 trillion 724 billion cubic feet. Inventories were 38 billion cubic feet above the five-year average.
However, on a weekly basis, the price of natural gas in British thermal units increased by 11.4 percent, while the barrel price of December term Brent oil increased by 0.5 percent to 117.6 dollars.
Shipment and harvest expectations in grains suppressed prices
In agricultural commodities, developments regarding Russia's grain exports, the advancing harvest in the USA and weather conditions in the main producing countries came to the fore.
Wheat prices fell as Russia's re-authorization of grain shipments from the Sea of Azov strengthened the expectation that exports would increase.
The progress of the harvest in the USA and the increase in the amount of products reaching the market put pressure on corn and soybean prices.
With these developments, prices per bushel on the Chicago Mercantile Exchange decreased by 3.5 percent for wheat, 2.7 percent for soybeans and 2 percent for corn, while the price per hundred pounds of rice decreased by 0.5 percent.
The fact that hot and dry weather supported the harvest in the main cotton production regions of the USA strengthened the expectations regarding the supply to the market.
In coffee, the rains in Brazil supported the development of the new product and the improvement in the supply outlook put pressure on prices. The resurgence of Intercontinental Exchange certified arabica stocks also eased supply concerns.
The depreciation of the Brazilian real in sugar encouraged producers to increase their sales in dollars. In Brazil, the slowing down of the harvest and the decrease in production were the factors that limited the losses.
In the US, Intercontinental Exchange's pound-based prices decreased by 6.6 percent for coffee, 4.3 percent for sugar and 2.9 percent for cotton, while the price per ton of cocoa closed the week with a 2.5 percent decrease.
