Commodity market saw strong fluctuations last week

By Burhan Sansarlioglu

ISTANBUL (AA) - The commodity market left behind a week of strong fluctuations.

The market saw a mixed course last week amid central banks' interest rate decisions, macro-economic data, geopolitical developments and issues related to production.

Uncertainties regarding monetary policies in global markets play an important role in the performance of commodity instruments.

The US' Fed last week raised its policy rate by 25 basis points to the highest level since January 2001, after it kept constant in the previous monetary policy meeting.

The Fed targets to reach the 2% inflation goal and maximize employment, it added.

Jerome Powell, the chair of the bank, said it is possible to hike rates in September if necessary.

The European Central Bank also increased rates by 25 basis points last week.

Christine Lagarde, president of the European Central Bank, said despite the decreasing trend in inflation, it will continue to be at high levels for a long time.

Analysts said that a tight monetary policy is still on the table and this situation caused a downward pressure in the commodity market.

Meanwhile, the US economy expanded by 2.4% and exceeded expectations.

The decreasing value of euro due to negative results in purchasing managers' index in the euro area increased the demand for the US dollar, which affected precious metal prices severely.

- Price developments in commodities

The ounce price of gold dropped 0.2% last week to $1,959 and ended its three-week increase trend.

Silver, platinum and palladium lost 1.2%, 2.8%, and 3.8%, respectively.

Energy prices saw mixed figures; Brent oil gained 4.4% last week while natural gas dropped by 2.6%.

Goldman Sachs expects that the high demand will increase crude oil prices soon.

The decrease in US oil stocks and global supply concerns were effective in increasing oil prices last week.

Base metals increased after China announced it will increase incentives.

Copper's price rose by 3% last week, lead by 1.9%, aluminum by 0.4%, nickel by 7.5%, and zinc by 4.1%.

Agricultural commodities saw strong price changes last week.

Wheat's price gained value by 1%, while corn, soybean and rice dropped by 1%, 1.4% and 1.7%, respectively.

Russia's attack on the port infrastructure on the Danube in the Odessa region of Ukraine affected the wheat prices.

The price of cotton lost 0.3%, coffee 2.4% and sugar 2.3%, while cocoa rose by 3.2% last week.

With improving weather conditions in Brazil and Thailand, concerns about sugar production eased, which decreased prices.

Improved weather conditions in Brazil also decreased coffee prices.

The decrease in cocoa supply in Ivory Coast and the concerns about the El Nino caused cocoa prices to rise.

* Writing by Gokhan Ergocun