Last week witnessed a notable surge in the prices of oil, iron ore, and coal, driven by various global factors. However, gold and copper faced significant setbacks, particularly due to the lack of positive news emanating from China, a key player in the global commodities market.
In the oil sector, US West Texas Intermediate (WTI) crude settled up 5.8% for the week, reaching $76.84 a barrel on Friday, while Brent crude rose 5.4%, settling at $82.19 for the week. These gains partly offset the losses experienced in the previous week. The rise in oil prices was attributed to events in the Middle East and concerns about the Red Sea shipping lanes. Additionally, the US Energy Information Administration (EIA) lowered its US production outlook for 2024, foreseeing a peak below 13.3 million barrels per day. Despite this, volatility is expected to increase as geopolitical tensions escalate, notably with Israel's preparations for an attack on Rafah, Gaza's last major city.
Meanwhile, gold faced a downturn, ending the week down 0.9% at $2,038.10 an ounce. This decline was influenced by a rise in the US dollar index and a slight uptick in bond yields. The metal has seen a 1.6% decrease since the beginning of 2024, reflecting investors' cautious approach amidst uncertainty surrounding inflation, dollar value, and potential interest rate hikes by the Federal Reserve.
In contrast, copper experienced a notable drop, losing over 3.4% to settle just above $368 a pound. This decline came despite previous optimism surrounding Chinese government interventions to stabilize markets, highlighting the metal's sensitivity to developments in the Chinese economy.
On the other hand, thermal coal prices from Newcastle saw a 4.75% increase, reaching $125.70 a tonne for 6,200 – 6,300 Kc thermal coal. Similarly, Singapore hard coking coal rose slightly to $301 a tonne, up from the previous week's $297.50 a tonne. SGX iron ore also edged higher, closing at $127 a tonne for the standard 62% Fe fines deliverable to China, up from $126.28 a tonne the previous week.
Overall, while oil, iron ore, and coal markets saw significant gains driven by various geopolitical and supply-demand factors, gold and copper faced challenges amidst uncertainties in global economic conditions, particularly with regard to China's economic performance and US monetary policy.
