Most commodities prices rose sharply on Tuesday with gold continuing its rally in anticipation of further interest rate cuts by the US Federal Reserve.
Gold prices surpassed the $3,800 per ounce mark on Tuesday for the first time ever as safe-haven appeal continued to boost sentiments.
Oil prices jumped nearly 2% after oversupply concerns abated.
Meanwhile, copper prices were little changed even as Commerzbank AG expressed doubts over the red metal’s recent rally.
Gold flies
On Tuesday, gold prices reached unprecedented highs, primarily due to heightened demand for safe-haven assets.
This surge followed recent statements from Federal Reserve officials that raised concerns about the timing of future interest rate reductions.
On Monday, several Federal Reserve officials expressed caution regarding further interest rate cuts.
Atlanta Fed President Raphael Bostic, for instance, indicated in an interview that he did not support an October rate cut, citing concerns about persistent inflation.
Beth Hammack, president of the Cleveland Fed, shared Bostic’s concerns, noting that current policy was not sufficiently restrictive. It is worth noting that neither Fed member sits on the central bank’s rate-setting board.
A week after joining the Board, Stephen Miran, a board member, continued to advocate for significantly lower interest rates, aligning with Trump’s position.
In last week’s Fed meeting, Miran was the sole dissenter, arguing for a 50 basis point cut instead of the 25 bps implemented by the central bank.
“Strong buying interest from ETF investors is likely to have given the gold price a boost,” Carsten Fritsch, commodity analyst at Commerzbank AG, said in a report.
Silver prices surged yesterday, reaching a 14-year high of over $44 per troy ounce, following a similar trend in gold.
This rise caused the gold/silver ratio to briefly drop below 85, marking its lowest point this year.
Oil prices jump
Oil prices increased on Tuesday as a stalled agreement to resume oil exports from Iraq’s Kurdistan allayed some investor worries that the restart would exacerbate global oversupply concerns.
On Tuesday, investors closely monitored progress on the agreement to resume oil exports from Iraq’s Kurdistan region.
The deal faced a setback as two oil-producing companies requested assurances regarding the repayment of their debts.
Since March 2023, approximately 230,000 barrels per day of oil exports from Kurdistan to the global market via Turkey have been suspended.
A new agreement between Iraq’s federal and Kurdish regional governments and oil firms aims to resume these exports.
The global oil market anticipates increased supply and decreased demand.
This slowdown is primarily due to the rising adoption of electric vehicles and economic strains resulting from US tariffs.
The International Energy Agency (IEA) stated in its latest monthly report that global oil supply is expected to increase more rapidly this year.
This could lead to an expanded surplus in 2026, driven by increased output from OPEC+ members and growing supply from non-OPEC+ producers.
At the time of writing, the price of West Texas Intermediate crude was at $63.58 per barrel, up 2.2% from the previous close.
Brent crude was 1.7% higher at $67.71 per barrel.
Base metals
Copper prices were flat on LME on Tuesday at $10,000 per ton.
According to Commerzbank AG, the price increase has already gone too far.
There is currently no clear indication that the scarcity of raw materials is significantly affecting metal processing.
“Given the dynamic copper production in China, it stands to reason that this trend will continue,” Thu Lan Nguyen, head of FX and commodity research at Commerzbank AG, said.
We therefore expect the copper price to fall back below the USD 10,000 per ton mark in the coming months
The nickel market remains under pressure due to an expected surplus, despite ongoing supply disruptions in Indonesia.
This fundamental oversupply continues to drive down prices and increase market volatility.
“Zinc found some reprieve as the market continued to digest speeches from US Fed officials, and the US dollar index weakened slightly,” Neil Welsh, head of metals at FCA regulated multi-asset brokerage Britannia Global Markets, said in an emailed commentary.
This coupled with the ongoing destocking trend in LME inventories, down 17% on the month and 80% on the year.
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