The escalation of tension in the Middle East and the inflation data announced in the USA indicating that inflationary pressures remain strong have increased the interest rate increase expectations for the Fed.
While high energy prices as a result of geopolitical developments in the Middle East caused inflationary pressures to continue around the world, rising bond interest rates and increased demand for the dollar put pressure on commodity markets this week.
The US 10-year bond yield approached 5 percent during the week, testing the highest level since October 2023.
According to the announced macroeconomic data, the Consumer Price Index (CPI) in the USA increased by 0.4 percent on a monthly basis and 3.4 percent on an annual basis in August, in line with expectations.
Core CPI, which excludes food and energy prices, rose above expectations with 0.3 percent on a monthly basis and increased by 2.4 percent on an annual basis. The Producer Price Index (PPI) in the USA increased by 0.4 percent on a monthly basis in August, within expectations, and on an annual basis by 5.4 percent, above expectations.
According to the pricing in the money markets, there is an 87 percent probability that the Fed will increase interest rates at its interest rate decision meeting next week.
Precious metals upset investors
The strengthening of the dollar index and rising bond interest rates put pressure on precious metal prices.
On the other hand, it also drew attention to inflation risks after the European Central Bank (ECB) increased policy interest rates for the second time since the beginning of the conflict in the Middle East.
Predictions that the bank may continue its tight monetary policy also contributed to the decline in precious metals.
Analysts said that although long-term expectations are optimistic, especially for gold, current geopolitical and macroeconomic developments have a downward impact on gold prices.
With these developments, prices on an ounce basis in precious metals decreased by 6.3 percent for palladium, 2.6 percent for silver, 1.2 percent for platinum and 0.4 percent for gold.
As for base metals, prices on a pound basis in the over-the-counter market this week decreased by 2.2 percent for nickel, 1.8 percent for zinc, 1.6 percent for copper, 0.8 percent for lead and 0.2 percent for aluminum.
Meanwhile, the pound of copper, which reached a record level of $6.81 this week with the news flow that the USA would impose tariffs on the refined copper it imports, later dropped from this level to $6.47 with the news that these tariffs could be postponed.
Oil prices rose sharply due to geopolitical risks
Considering the developments on the energy side, the barrel price of Brent oil in the spot market increased by 7.6 percent on a weekly basis, while the price of natural gas in British thermal units decreased by 3 percent.
Concern that the escalating tension between the USA and Iran could lead to disruptions in global oil supply caused sharp increases in oil prices.
The US Energy Information Administration (EIA) revised its oil price forecasts upwards for this year and next year due to the impact of oil supply disruptions in the Middle East.
According to EIA's "Short-Term Energy Outlook" report for September, the average barrel price of Brent type crude oil, which is considered the international reference, rose to 91 dollars in August.
While the barrel price of Brent oil tested the highest level since May 20 at 106.2 dollars, it stabilized at 101.7 dollars on Friday with the news flow that Oman and Iran may have an agreement to temporarily manage the passage through the Strait of Hormuz.
The increase in natural gas stocks in the USA caused a decrease in prices.
Peace hopes between Russia and Ukraine pushed wheat prices down
Prices per bushel on the Chicago Mercantile Exchange fell 0.8 percent for soybeans, 0.9 percent for corn and 1.1 percent for wheat. The price of rice per hundred pounds increased by 1.4 percent.
The price per bushel of soybeans, which reached the highest level since December 2023 at 13.3525 dollars, dropped below 13 dollars with profit sales from this level.
In the United States, Intercontinental Exchange prices in pound terms increased by 6 percent for sugar, while they decreased by 3.8 percent for coffee and 0.2 percent for cotton. The price per ton of cocoa fell by 4.4 percent.
The decrease in supply concerns in wheat due to the steps taken for peace between Russia and Ukraine caused the prices to decline. While intense demand from China increased soybean prices, profit sales were later seen in soybeans.
On the other hand, supply concerns arising from the El Nino weather event cause sharp increases in sugar prices. Strong domestic demand in India and the expected production decrease in the European Union also support sugar prices.
Predictions that production will increase in Brazil in 2027 led to a decrease in coffee prices.
Despite the decline in cocoa production in Ivory Coast, predictions that the global surplus may continue have pushed prices down.
