The fact that inflation is above the targets and high oil prices have strengthened the expectations that leading central banks, especially the US Federal Reserve (Fed), will continue to tighten their monetary policies. With the increasing selling pressure in global bond markets, the US 10-year bond interest rate increased to 5.34 percent and 30-year bond interest increased to 5.69 percent, reaching their highest levels since 2002.
Later, the 10-year bond interest stabilized at 5.28 percent and the 30-year bond interest at 5.61 percent. Supported by the rise in bond interest rates, the dollar index completed the week at 101.9 with a 1 percent increase.
On the other hand, inflation and employment data released in the USA during the week weakened the expectations that the Fed would raise interest rates in the near term.
The core personal consumption expenditures price index, which is closely followed by the Fed and excludes food and energy items, increased by 0.2 percent monthly and 3 percent annually in August.
While non-agricultural employment in the USA increased by 29 thousand people in September, remaining below expectations, the unemployment rate rose to 4.2 percent. Following the employment data, the probability of the Fed raising interest rates in October decreased to 23 percent in money markets.
RISING BOND RATES PRESSURIZED PRECIOUS METALS
The strengthening of the dollar and the high levels of US bond interest rates were decisive in precious metals.
Rising bond yields increased the alternative cost of non-interest bearing precious metals, while the appreciation of the dollar made these metals more expensive for investors using other currencies.
The ounce price of gold fell to 4 thousand 111 dollars with the sales at the beginning of the week, reaching its lowest level since August 5. Concerns that tensions in the Middle East could increase inflation through oil prices kept alive the expectation that interest rates would remain high for a long time.
Core inflation being below expectations and weak employment data released on Friday provided temporary support for gold.
However, the re-sales taking effect after the rise seen on the last trading day of the week prevented the precious metal from compensating for its weekly losses.
Analysts stated that the Fed's maintenance of its tight stance in the fight against inflation led gold investors to act cautiously, and stated that the extent to which the bank will tolerate the possible weakening in the labor market will be decisive in terms of the course of gold.
Rising bond interest rates in silver also suppressed investment demand. Analysts stated that the faster-than-expected reduction in the amount of silver used in solar panel production and the slowdown in new panel installations weakened the expectations for industrial demand.
With these developments, prices on an ounce basis in precious metals decreased by 8 percent for palladium, 6.1 percent for silver, 4.6 percent for platinum and 3.4 percent for gold. The ounce price of gold completed the week at 4 thousand 141 dollars.
A DECREASE WAS OBSERVED IN BASE METALS
The strengthening dollar, high energy costs and concerns about global demand in base metals pressured prices.
Analysts stated that energy costs increased by the conflict between the USA and Iran and concerns about industrial demand in China caused a cautious outlook in metal markets.
Data showing that Chile's August copper production decreased by 12.8 percent annually and the possibility of a strike at the Escondida mine increased supply concerns. Although the decline in the dollar on Friday provided support for copper, these developments were not enough to compensate for weekly losses.
The demand outlook was supported by China's manufacturing industry Purchasing Managers Index rising to 50.1 in September and moving back into the growth zone.
The People's Bank of China's reduction of the one-year funding rate for policy banks by 25 basis points was also among the steps supporting the economy.
In base metals, prices on a pound basis in the over-the-counter market in the completed week decreased by 5.4 percent in aluminum, 5.1 percent in nickel, 5.1 percent in zinc, 4.7 percent in lead and 2.9 percent in copper.
AN INCREASE WAS OBSERVED IN THE ENERGY GROUP
Uncertainty regarding the diplomatic process between the USA and Iran and supply risks originating from the Middle East were effective in oil prices.
International Energy Agency (IEA) President Fatih Birol stated that although crude oil exports in the region have recovered significantly, refined product shipments remain limited. Birol pointed out that the attacks on refineries in Russia increased the supply congestion, especially in the diesel market.
On the last trading day of the week, decisions to put energy reserves into use limited the upward pressure on prices.
G7 leaders decided to release a total of 100 million barrels from oil and petroleum products reserves within 4 months, under the coordination of the IEA. In the joint statement, it was stated that a significant part of the diesel reserves will be released to the market within the first 20 days.
LNG export and stock data in natural gas were monitored. While US LNG exports in September increased to 10.9 million tons, 54 percent of the shipments were made to Europe.
Natural gas stocks in the USA increased by 64 billion cubic feet in the week ending September 25, reaching 3 trillion 415 billion cubic feet. The fact that stocks were 2.4 percent above the five-year average supported the supply outlook.
However, on a weekly basis, the barrel price of December term Brent oil increased by 3.5 percent, and the price of December term natural gas in British thermal units increased by 1.2 percent.
AGRICULTURAL COMMODITIES WERE MIXED
A mixed trend was observed in agricultural commodities during the week, as stock and production data and harvest data announced by the US Department of Agriculture (USDA) pressured prices.
In the report published by USDA, it was reported that as of September 1, US corn stocks reached 2 billion 100 million bushels, with an annual increase of 35 percent. Stocks exceeding market estimates and harvest progress put pressure on corn prices.
Although the stock outlook and strong export sales in soybeans supported prices, the supply pressure caused by the new crop reaching the market came to the fore.
The announcement of the US wheat production forecast above market expectations increased sales. As for rice, the progress of the harvest and the weak demand for the US product put pressure on prices.
With these developments, prices per bushel on the Chicago Mercantile Exchange decreased by 5.9 percent for corn, 3.2 percent for soybeans and 2.9 percent for wheat, while the price per hundred pounds of rice decreased by 1.4 percent.
Predictions that the rainfall during the flowering period in coffee may be insufficient in Brazil supported the prices. The decline in the dollar on Friday also strengthened purchases.
While the current season's excess supply of cocoa put pressure on prices, concerns that the dry weather in Ivory Coast could negatively affect new season production limited the decline.
While prices on a pound basis at the Intercontinental Exchange in the USA increased by 7.6 percent for sugar and 4.4 percent for coffee, there was a 4.8 percent decrease for cotton. The price per ton of cocoa also completed the week with a decrease of 0.2 percent.
