Commodity prices fall in July on tariff fears, Fed uncertainty

By Burhan Sansarlioglu and Emir Yildirim

ISTANBUL (AA) – Global commodity prices declined in July as US President Donald Trump’s protectionist tariff policies and uncertainty over the US Federal Reserve’s independence weighed on market sentiment.

Though the US reached some trade agreements that limited volatility, reports of new tariffs kept investors cautious. Fed Chair Jerome Powell’s refusal to commit to a timeline for interest rate cuts further dampened confidence, triggering selling pressure in several commodity segments.

- Metals mixed, copper plunges

Gold slipped 0.4% per ounce in July as easing fears over trade tensions reduced demand for safe-haven assets. Silver rose 1.7% to $39.5 per ounce, the highest since Sept. 11, driven by potential US tariffs on the metal and rising demand in green energy, solar panel production, electric vehicle batteries and AI technologies.

Palladium gained 8.6% per ounce due to strong Chinese demand and expectations of US tariffs. Platinum, meanwhile, fell 5% after briefly hitting its highest level since July 2014 at $1,485.7 per ounce.

Copper saw the steepest fall, declining 12.9% to end the month despite reaching $5.92 per pound earlier, following Trump’s announcement of a 50% tariff on copper imports. The price fell after clarification that refined copper products would be exempt.

Analyst Zafer Ergezen said copper’s nearly 25% drop from peak levels reflected the depth of the market reaction.

Aluminum slipped 1.4%, lead 3.6%, and nickel 1.7%, while zinc edged up 0.5% per pound on supply concerns at the London Metal Exchange.

- Energy: Crude oil climbs, natural gas plunges

Brent crude surged 7.9% per barrel in July due to output disruptions, geopolitical uncertainty and Trump’s rhetoric on Russia and President Vladimir Putin amid the second year of genocide in Gaza and more than 1,000 days of the Russian war on Ukraine, which started in February 2022. Lower US production estimates, higher summer travel and a looming 25% US energy tariff on India from Aug. 1 also contributed to the increase.

Natural gas dropped 10.1% in July as soaring temperatures cut demand.

- Agricultural prices mixed

Agricultural commodities posted mixed results. Cocoa prices dropped 14% on expectations of weaker global chocolate demand. Coffee fell 1.4% per pound due to cooling demand after record highs, with the International Coffee Organization projecting a potential rebound in supply over the next three years.

Sugar rose 1.5% per pound on supply worries and support from rising oil prices. Cotton declined 1.3% as global economic concerns continued to drag on demand.

Wheat edged down 0.1%, rice dropped 7.9%, and soybeans lost 3.7%. Corn rose 1.1%.

- Analyst: Tariff policy to remain key market driver

Trump’s ongoing tariff strategy is expected to continue impacting commodity prices, global trade and the broader economy, said Ergezen.

“Trump holds the power to affect commodity prices, global trade, the global economy, and even politics, not only via tariffs but also via the decisions he’s made — we will see this trend continuing,” he said.

He noted that US non-farm payrolls came in below estimates after the tariff announcements, signaling a slowdown, though it's unclear whether that was due to tariffs or high interest rates.

“Powell has already said this many times, that tariffs will indeed cause a slowdown in the economy,” Ergezen said. “But the lower-than-expected non-farm payrolls will push Trump to keep on pressuring Powell.”