Raw materials: copper and gold tarnish, sugar rise

Raw materials: copper and gold tarnish, sugar rise

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Around 5:15 p.m., an ounce of gold traded for 1,745.98 dollars, against 1,811.43 dollars the previous Friday at the end of the session.

Copper prices fell over the week on the London Metal Exchange (LME), weighed down by fears of a slowdown in the global economy, reaching their lowest level in a year and a half on Wednesday.

“Concerns about the imminent risk of recession have led to a sharp drop in commodity prices, with copper prices hitting their lowest” since November 2020 on Wednesday, at 7,291.50 dollars per ton, commented Michael Hewson, analyst at CMC Markets.

Heavily used in industry, especially for making electrical circuits, copper is known to reflect the state of health of the world economy, hence its nickname of Doctor Copper (Dr Copper).

The red metal is thus very sensitive to a potential slowdown in global economic activity, serving as a barometer of the economy.

Since the beginning of the year, copper has fallen by more than 20%.

Carsten Fritsch, analyst at Commerzbank cites “fears of a gas crisis in Europe, an economic slowdown in the United States, new cases of coronavirus and possible confinements in China” as the factors thinking on industrial metals.

Several million people are confined to China due to an epidemic rebound which raises fears of the return of restrictions, in particular in Shanghai, a month after the lifting of a long and grueling confinement.

On Thursday and Friday, copper prices recovered slightly. A rebound caused “by a report that the Chinese government is planning another economic stimulus program”, according to Carsten Fritsch.

Commerzbank analysts, however, remain “skeptical” as to whether this recovery “marks a turning point”.

Around 3:15 p.m. GMT (5:15 p.m. in Paris) on the London Metal Exchange, a ton of copper for delivery in three months was trading at 7,813.00 dollars on Friday against 8,048.00 dollars on Friday at the close, seven days earlier. .

gold dip

The price of gold hit its lowest since September on Wednesday and failed to recover at the end of the week, penalized by the strength of the dollar with the prospect of a tight monetary policy in the United States.

The appreciation of the greenback, the reference currency of the gold market, makes the precious metal more expensive and therefore less attractive for investors using other currencies.

“Increasing expectations of a Fed (Federal Reserve) rate hike are weighing on gold,” said Han Tan, an analyst at Exinity Group.

Along with dollar appreciation, a tighter Fed makes government bonds more profitable, making these safe havens more attractive to investors than gold.

However, as markets increasingly expect a recession in both the United States and Europe, gold could once again benefit from investor concerns, some analysts are betting.

Those of Goldman Sachs thus write that “the risks of recession in the United States and in Europe are boosting the attractiveness of gold as a safe haven, which offsets the effect of higher rates”.

In the short term, however, “only a miraculous decline in the dollar could allow gold to emerge,” warns Jeffrey Halley, analyst at Oanda.

Around 3:15 p.m. GMT (5:15 p.m. in Paris), an ounce of gold traded for 1,745.98 dollars, against 1,811.43 dollars the previous Friday at the end of the session.

Shaped sugar

Sugar prices rose over the week as market supply remained low, with some of the crops being turned into ethanol due to soaring fuel prices.

Sugar supply and production are limited at the moment, said Price Futures Group analyst Jack Scoville.

Brazil, one of the world’s top sugar producers and exporters “is in the process of harvesting its sugarcane crop and processing most of it into ethanol,” he says.

A high oil and fuel price encourages producers to transform part of their harvest into ethanol, which reduces the quantity of sugar on the market and drives up prices.

While crude oil prices have been capped recently by fears of a global economic slowdown, fuel prices continue to soar.

But selling is also taking place, “driven by the idea that a global recession is imminent, which has been reinforced by the rise in the US dollar,” says Jack Scoville of Price Futures Group.

In New York, a pound of raw sugar for delivery next October was worth 19.06 cents, against 18.07 cents seven days earlier.

In London, a ton of white sugar for delivery in October was worth 566.00 dollars against 549.40 dollars on Friday last week at the close.

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