Gold starred, oil didn’t, iron ore continued to slide, silver did well, copper gained and wheat stood out in global commodity markets last week.
Gold prices rose on Friday and posted their best week in six months, with the metal’s appeal as an inflation hedge boosted by high inflation readings in the US and China during the week.
Comex December futures ended the week up around 0.3% on Friday and 2.8% for the week after settling at $US1,868.50 an ounce.
Gold has gained as much as $US110 since November 3, bolstered by growing fears of inflation and reassurances from key central banks that interest rates would remain low for the time being.
Prices fell nearly 1% earlier in the session on Friday then rebounded to close on the upside.
Silver and copper also gained for the week.
Gold bugs can smile again. The gold price seems to have again broken free from the $US1720- $US1830 area where it was locked since June.
That’s because the US consumer price figures for October (and the producer prices) were a shock,
Silver is above $US25 at $US256.34, up 4.8% for the week while industrial metals also rallied with copper ending the week at $US4.45 a pound, up 1.2% on the day and 2.5% for the week.
That was despite another month in October of weak copper imports. That’s because copper smelting and refining has been hit by power rationing and restrictions on carbon emissions.
In London, LME copper was around $US9,850 a tonne, nickel was around $US19,800, a tonne and aluminium at $US2,700 a tonne.
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In agricultural commodities, wheat hit a new annual high, breaking through $US8.00 cents a bushel in Chicago.
US wheat futures hit their highest levels in nearly nine years on Thursday and Friday, while European wheat futures climbed to a 13.5 year high, boosted by concern that global exports could be lower than expected.
Chicago Board of Trade December wheat closed up 4.5 cents on Friday at $US8.17 a bushel after reaching $8.26.75, the highest price in a continuous chart of the most-active wheat contract since December 2012.
March milling wheat on Paris-based Euronext settled up 1.75 euros, or 0.6%, at 294.00 euros ($US336) a tonne.
On Thursday it had reached 296.00 euros, the highest price on a second-month position on Euronext since September 2007.
“The EU is getting to a spot where it can’t export a lot of new wheat. So Paris has pushed to a new record high,” said Dan Basse, president of AgResource Co in Chicago, told Reuters.
Support also stemmed from the rumours that Russia, the world’s top wheat supplier, could curb exports.
Russia may change the way it calculates grain export taxes if prices rise further, Agriculture Minister Dmitry Patrushev said. Russia also plans to set export quotas for the first half of 2022.
Meanwhile, Australian wheat export prices reached a record high on November 9 amid expectations of a bumper output for a second consecutive year and promising exports for the 2021-22 marketing year (October-September).
S&P Global Platts said it had assessed the Australian Prime White wheat index at a record high $343.50/tonne on November 9, up $2.50 a tonne from November 8, while the Australian Standard White wheat index was unchanged on the day at $333.50 a tonne.
Last week’s heavy rain had traders holding off until the drier weather expected across eastern Australian wheat areas this week.
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Oil prices fell Friday, wiping out gains on Thursday in the wake of worries that the US Federal Reserve will be forced to accelerate plans to boost interest rates to rein in inflation.
Brent crude futures fell 70 cents, or 0.8%, to settle at $US82.17 a barrel while in New York, US West Texas Intermediate (WTI) crude fell 80 cents, or 1%, to settle at $US80.79 a barrel.
Both benchmarks fell for a third consecutive week, hit by a stronger greenback and speculation that President Joe Biden’s administration might release oil from the U.S. Strategic Petroleum Reserve to cool prices.
Over the week Brent fell 0.7% and WTI 0.6%.
“This week has been a good reminder for oil markets that prices are not only affected by the supply-demand trajectory, but also from monetary policy forecasts and by forms of government intervention,” said Louise Dickson, senior oil markets analyst at Rystad Energy, told Reuters
“Higher interest rates would provide even further support to the dollar and even more downward pressure on oil prices.”
US companies again added oil and natural gas rigs for a third week in a row last week.
The oil and gas rig count rose six to 556 in the week to Friday, November 12, its highest level since April 2020, according to the weekly report from oil services company, Baker Hughes.
Oil was helped by the news that OPEC lowered its estimate for oil demand growth this year.
OPEC said it expects oil demand to average 99.49 million barrels per day (bpd) in the fourth quarter of 2021, down 330,000 bpd from last month’s forecast. The year’s demand growth forecast was trimmed by 160,000 bpd to 5.65 million bpd.
“A slowdown in the pace of recovery in the fourth quarter of 2021 is now assumed due to elevated energy prices,” OPEC said in the report.
OPEC also mentioned slower-than-expected demand in China and India for the downward revision.
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Iron ore prices fell over the week – losing more than 4% with 62% Fe fines ending at $US89.69 a tonne, down from $US93.14 a tonne the Friday before. 58% fines ended at $US62.62 a tonne, down from $US65.78 a tonne.
65% Fe fines from Brazil settled at $US104.70, down from $US110.80 with more reports of lower steel making activity because of carbon emissions and smog controls in northern steel making cities.
Many steel mills in the north have reportedly taken the opportunity of the production restrictions to bring forward maintenance activities. That further cut steel making and iron ore demand.
