Gold, silver, Brent crude oil dominate commodity markets in October

By Burhan Sansarlioglu

ISTANBUL (AA) - Gold prices tested a record high at $2,790.1 per ounce, silver rose to its 12-year high at $34.9, and the barrel price of Brent crude oil climbed 3%, dominating commodity markets in October.

Estimates that the Fed may go slower than expected in its rate cut cycle and demand concerns in China negatively impacted commodity prices, though an upward trend came to the fore in precious metals and Brent crude oil amid ongoing geopolitical risks.

The US economy remained strong in October as the macroeconomic data suggested, while analysts estimate that the Fed could slow the pace of rate cuts.

The World Bank reported that, in 2025, global commodity prices would fall to their lowest levels in the last five years due to oil abundance, and the bank estimated that global commodity prices would decline 10% from 2024 to 2026.

- Precious metals see significant gains

Gold reached its record high on increasing geopolitical risks in the Middle East, which prompted investors to seek the safe-haven commodity, while central banks gradually eased their tight monetary policies.

Gold’s record came in at a time when the US Dollar Index and US futures were rising, and despite increasing the alternative cost of gold, analysts believe that the rise in the US Dollar Index and futures were overshadowed by the rising risk perception due to ongoing geopolitical tensions.

The ongoing central bank purchases of gold and the US debt increases also contributed to the rise, while the London Bullion Market Association said the ounce price of gold could test $3,000 next year as the Fed’s rate cut cycle could reduce the demand for the US dollar.

The World Gold Council reported that the global demand for gold was 1,313 tons in the third quarter, up 5% year-on-year, registering a record high, and at the same time, the value of demand rose 35% on an annual basis to over $100 billion for the first time.

Meanwhile, silver tested its 12-year high on estimates that the global silver deficit may continue and the growing supply concerns also contributed to the rise. Analysts said that ongoing geopolitical risks also pushed silver prices upwards as silver is used in the military field, electronics, and renewable energy sectors.

Palladium rose 11.6% on reports that the US could impose sanctions on Russia’s palladium and titanium exports, while platinum climbed 1.4% due to stronger demand and supply disruption risks.

- Base metals under selling pressure

As demand for the US dollar increased, base metals went under pressure in October, and China’s stimulus package announcements for the ongoing problems in the country’s real estate sector did not satisfy the sector, pushing prices downwards.

Copper fell 4.1% on estimates that the Fed may adopt a more cautious approach to rate cuts and move slower than expected, while the decrease in supply concerns due to increased production by the Chilean miner Codelco contributed to declines, as well as China’s industrial profits, which showed less copper demand.

Aluminum diverged among base metals in October, rising 0.5% after China cut its one-year and five-year Loan Prime Rates by 25 basis points, from 3.35% to 3.1% and from 3.85% to 3.6%, respectively.

- Brent crude oil up, natural gas down

The barrel price of Brent crude oil rose 3% in October on global oil supply disruptions stemming from escalating tensions in the Middle East, where most global oil reserves are.

Meanwhile, the natural gas traded on the New York Mercantile Exchange fell 7.4% on temperature forecasts pointing to higher than seasonal norms.

- Agriculture group declines except for sugar

Sugar surged 1.2% per pound in October on estimates for a decrease in global sugar production.

Corn and soybean prices fell 3.3% and 5.9% per bushel, respectively, due to record-high production forecasts in the US, while rice declined 3.9% as world rice production estimates increased.

Coffee prices declined 9% per pound and the ton price of cocoa fell 10.8% on reports that the EU is preparing to delay implementing new legislation to prevent the import of various products that are produced by damaging forests, of which coffee and cocoa are part.

Forecasts of increased rainfall in Brazil and the depreciation in the Brazilian real also contributed to the decline in coffee.

* Writing by Emir Yildirim.