Commodities: Gold and nickel recover, sugar melts

This Friday afternoon, an ounce of gold was trading at $1,729.51, up from $1,708.17 seven days earlier at the close of the session.

Gold prices rose during the week and rallied in the last two sessions on worries about the global economy.

Manufacturing activity slowed in industrial Philadelphia in July, jobless claims surge: disappointing US indicators pushed gold higher.

“If there are even clearer signs of a recession in the United States, that would give gold a boost,” said Han Tan, an analyst at Exinity.

But the yellow metal started from very low as it melted to less than $1,700 an ounce on Thursday, its lowest level since March 2021.

In recent months, safe-haven investors have favored the dollar and US Treasuries, two assets spurred by the US Federal Reserve’s (Fed) tightening streak.

The market is now wondering whether tight monetary policy can be maintained in the event of a recession.

“If investors are anticipating fewer rate hikes for one reason or another, it will be favorable for gold,” said Craig Erlam, an analyst at Oanda.

But both Mr Erlam and Mr Tan advise caution at next week’s Fed meeting, a firm message from the monetary body to fight inflation that could cause the yellow metal to plummet again.

At around 15:45 GMT (17:45 Paris), an ounce of gold was trading at $1,729.51, up from $1,708.17 seven days earlier at the end of the session.

Nickel climbs the slope

Nickel prices rallied on the London Metal Exchange (LME) this week, benefiting from support from China as the metal recovered from a near 10-month low set last week despite a crowded market.

According to Commerzbank analyst Carsten Fritsch, the main reason for this new momentum is a “general recovery” as the market now appears to be in surplus, which should weigh on prices.

On Monday, China urged banks to lend more to developers as it grapples with a growing number of homeowners refusing to make their monthly payments, which is helping to deepen the real estate crisis.

“Chinese markets appear to be interpreting the call as a stimulus to support the housing market,” said Jeffrey Halley, an analyst at Oanda.

Base metals like nickel and aluminum reacted higher, “suggesting markets believe government intervention will unlock the construction sector in China,” the analyst said.

In fact, some corporations are struggling to continue their construction sites and timely delivery of housing units sold before they are built.

On the LME, a tonne of nickel for delivery three months ahead was trading at $22,125 around 15:45 GMT (17:45 Paris) on Friday, up from $19,385 at the close on Friday earlier.

sugar drops

Sugar prices fell throughout the week, weighed down by the erosion of demand from high prices, while supply recovered.

The market is “more concerned about demand now after the recent price hike,” says Jack Scoville of Price Futures Group.

According to this analyst, concerns about the lack of sugar supply have now receded and Brazil and India are forecasting good harvests.

Lower oil prices due to concerns about a slowing global economy have also made ethanol production less attractive.

Typically, high oil and fuel prices prompt producers to turn some of their crops into ethanol, reducing the amount of sugar on the market and driving up prices.

In New York, a pound of raw sugar for delivery in October was worth 17.97 cents, down from 19.25 cents seven days earlier.

In London, a tonne of white sugar for delivery in October was worth $525.10 at the close, up from $598.60 the previous Friday.

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