The majority of commodity prices rose on Friday, with crude oil up more than 1% as a result of geopolitical tensions between the Middle East, Ukraine and Russia.
As the US Federal Reserve meets next week, gold prices have continued to remain near their all-time highest levels.
Copper prices at the London Metal Exchange have also exceeded $10,000 a ton once. The traders will be watching closely to see if the red metal is able to defend its gains in order for it remain above this crucial price level.
Analysts believe the Fed’s meeting next week will have a double-edged sword on copper and other base metals.
Silver prices at COMEX reached near $43 an ounce on Friday, as the optimism about interest rate cuts increased.
Oil prices jump 1%
As supply concerns gripped the markets, both oil benchmarks rose by more than 1 percent earlier that day.
Drones targeted the port of Primorsk in Russia, which is a key oil and fuel terminal located in its northwest. According to the governor of the region, a ship and pumping station caught fire after Friday’s attack.
Adani Group in India, which is the largest private port operator of the country, has banned all tankers that are subject to Western sanctions.
The move may have an impact on Russian oil supply. India is the biggest importer of Russian oil by sea, with much of it transported in tankers that are sanctioned and inspected by the European Union (EU), the United States, and Britain.
According to a report released by the International Energy Agency on Thursday, global oil production is expected to grow faster than originally anticipated in 2018.
The OPEC+ group, which includes the Organization of the Petroleum Exporting Countries (OPEC) and its allies such as Russia, is responsible for this accelerated growth.
OPEC, in its own report released the following day, also maintained relatively high predictions for the growth of oil demand for the year ahead.
OPEC believes that global economic growth is robust.
Brent crude rose 1.6% to $67.43 a barrel at the time this article was written.
Gold Consolidates
The gold price rose on Friday and is now close to the previous record.
The increase in demand was largely due to a weak US labour market. This has led many people to expect multiple rate cuts for this year.
The US Federal Reserve’s meeting is sure to be the focus of attention on precious metals next week. Already, a 25 basis-point interest rate reduction is priced into the market.
In a recent report, Thu Lan Nguyen said that there was a risk the Fed would take an aggressive 50 basis point step.
She added that “this is reinforced by the substantial slowdown on the labor market and the continued high political pressure.”
The gold price will likely resume its recent rise and reach a record-breaking high if the Fed surprises with an even larger rate reduction.
Donald Trump, the US president, urged Federal Reserve chairman Jerome Powell on Wednesday to lower benchmark interest rates.
Copper: Can it defend its gains
Nguyen stated that the Fed’s meeting was a “double-edged blade” for base metals.
She said that a highly dovish summit could result in base metals gains as the prospects of substantial interest rate reductions improve the medium-term outlook for the economy.
Demand is also affected by the economic slowdown that is expected in the near future, and the consequent interest rate reductions.
Nguyen said that this would likely limit price increases.
China’s industrial production numbers are eagerly anticipated. Aluminum prices could rise if August’s production figures, which have been near records, show a decline.
A simultaneous increase in the number of LME warrants canceled for this metal indicates a growing Asian market.
The data for Chinese copper production won’t be published next week. Statistically, the total amount of metal produced will only be reported.
The three-copper LME contract was trading at $10,084.40 a ton as of the writing. This is up by 0.2% compared with the previous closing price.
The post Commodities Wrap: Oil jumps due to geopolitical tensions; Gold consolidates near its highs could be updated as new developments unfold.
