Commodity prices down amid Fed’s cautious approach to rate cuts next year

By Tunahan Kukurt

ISTANBUL (AA) - Commodity prices were down on Friday after the Fed’s dot plot showed that the bank could only make two rate cuts of 50 basis points in total next year, despite the recent 25-basis-point cut, as Fed Chair Jerome Powell said the bank would be more cautious next year, fueling risk perception.

Powell stated that it may take another year or two to reach the 2% inflation target.

The market estimates show that the Fed is almost certain to keep its policy rate unchanged at the first meeting next year.

The core Personal Consumption Expenditures (PCE), the Fed’s inflation indicator, came below expectations by climbing 0.1% month-on-month and 2.8% on an annual basis in November, according to data released on Friday.

The US Dollar Index rose to 108.5 last week, completing the week at 107.6.

Fitch Ratings said that Donald Trump’s planned tariffs after taking office in January and possible countermeasures from affected countries pose great risks for the global commodity markets.

Meanwhile, the ounce price of gold fell 1% last week.

Italian energy firm Iren said on Friday that it opened a plant to recover critical raw materials from electronic waste with a new technology producing three times less carbon emissions, which will process over 300 tons of circuit boards every year, recovering 200 kg of precious metals and 57 tons of copper.

The ounce price of silver lost 3.1% and palladium 3.6%, while platinum climbed 0.1% last week.

As for base metals, copper fell 2.4% per pound after Australian miner BHP said it plans to renew its previously unsuccessful bid to acquire Anglo American’s copper assets, while Swiss trader Mercuria said it established a metal trading agreement with Zambia, Africa’s second largest copper producer, and Peru’s copper production remained the same level for a third year in a row.

At the same time, aluminum fell 0.8%, nickel 1.1%, lead 0.6%, and zinc 2.4%.

As for the energy group, uncertainties over the Fed’s future roadmap impacted oil prices, as the Brent crude oil fell 1.9% per barrel.

Restarting clashes in western Libya resulted in damages to Zawiya, the region’s largest oil refinery.

Natural gas on the New York Mercantile Exchanged soared 11.5% per British thermal unit (MMBtu).

Meanwhile, wheat and rice fell 3.53% and 6%, respectively, after India announced an extension on the suspension of trading in key agricultural commodities until January as the country seeks to contain its food inflation.

Chinese state media said that China would accelerate the pace of agricultural and rural modernization to ensure stable and high grain production on Wednesday.

Syria’s ports resumed their ordinary operations on Monday after days of disruptions, while officials stated Ukraine was in contact with the interim government in Syria for the delivery of basic food items.

On the Chicago Mercantile Exchange, corn climbed 0.9% and soybeans fell 5.8% per bushel.

At the same time, the ton price of cocoa rose 5% last week due to adverse climate events, hitting an all-time high of $12,931 on Wednesday.

Sugar fell 5.8% per pound after Indian sugar mills said they could export up to 2 million tons of sugar this season.

On the Intercontinental Exchange, the pound price of cotton decreased 1.7% and coffee climbed 1.2%.

The EU has approved the one-year postponement of the anti-deforestation law, announcing the postponement of the green law, which was prepared to combat climate change and was scheduled to come into force this month.

*Writing by Emir Yildirim