ISTANBUL 

Commodity prices fluctuated last week, affected by the Fed's signals of a slower than expected rate cut, uncertainties surrounding the upcoming US presidential election, and rising geopolitical tensions.

Uncertainty over the elections and the Fed’s actions strengthened demand for the US dollar, while US 10-Year Treasury Futures climbed 4.25% after the Fed cut interest rates by 50 basis points. Analysts suggest that this indicates the Fed may avoid aggressive future rate cuts due to improving economic data, leaving investors in “wait-and-see” mode until after the elections.

Gold hits record high

Gold prices reached a record $2,758.5 per ounce last week, rising 1%, as expectations for a soft landing in the US economy and escalating Middle East tensions drew investors to safe-haven assets.

Analysts project that gold could hit $3,000 per ounce next year, with the Fed's rate cuts potentially lowering demand for the dollar, thus boosting gold prices. Meanwhile, palladium surged 10.4% per ounce on reports of possible US sanctions on Russia’s palladium and titanium exports.

The strong dollar also put downward pressure on base metals. Zinc prices rose 0.5% per pound after Teck Resources, a Canadian mining firm, cut production targets by 12% following a smelter fire. Aluminum climbed 2.5%, bolstered by China’s 25-basis-point reduction in its 1-year and 5-year Loan Prime Rates (LPR), which raised hopes for increased demand. Conversely, copper and lead fell 0.5% and 1.3%, respectively.

Oil and natural gas prices surge

Brent crude oil prices rose 3.7% last week amid heightened geopolitical risks, while natural gas on the New York Mercantile Exchange increased 11.8% on colder weather forecasts and lower-than-expected supply.

Mixed movement in agricultural commodities

Agricultural commodities followed a mixed trend. Corn prices rose 2.7% per bushel (60.5 pounds) due to drought concerns in Russia and Ukraine, and soybean prices increased 2.9% with heightened demand. Wheat, however, declined by 0.6% per bushel, and rice edged up 0.5%.

Coffee and sugar prices fell 3.5% and 0.4%, respectively, due to anticipated rainfall in Brazil and the weakening Brazilian real against the US dollar. Cocoa prices dropped 15% per ton (2,204.6 pounds) last week as rainfall in Ivory Coast and Ghana raised concerns over reduced supply, while cotton dipped 0.4% per pound.

*Writing by Emir Yildirim