Commodities: Gold and copper fall, sugar falls from its peak

At 15:40 GMT on the LME, a tonne of copper for three-month delivery was trading at $7,707 on Friday, down from $7,856.50 at the close seven days earlier.

Copper prices fell on the London Metal Exchange (LME) this week, weighed down by fears of a global recession weighing directly on base metals as demand falls.

According to analysts at Commerzbank, however, supplies could be interrupted because a strike is “imminent” in Chile at Escondida, the world’s largest copper mine.

“The mining company continues to deny the union’s allegations regarding safety issues,” they explain.

“Therefore, it is becoming more and more likely that the union will call its workers on strike, which could push up the price of copper, at least temporarily.”

Morgan Stanley analysts also note that while the focus is on “downside risks to demand” in the near term, “structural changes” are likely to materialize in the longer term, leading to increased demand for copper and aluminum as electric develops vehicles and renewable energy.

As of 15:40 GMT (17:40 Paris) on the LME, a tonne of copper for three-month delivery was trading at $7,707 on Friday, up from $7,856.50 at the close seven days earlier.

gold in disarray

Gold prices plummeted over the week, falling to $1,654 on Friday, a level not seen since April 2020, as investors continued to bet on aggressive monetary policy from the US Federal Reserve (Fed).

This makes US Treasuries more profitable and therefore gold less attractive compared to this other safe haven asset.

Stronger-than-expected US inflation in August “spurred markets to bet on a more active Fed,” said Han Tan, an analyst at Exinity.

As the central bank meets next week, “gold will continue to fall as it signals it intends to keep the accelerator pedal on hold, which would mean interest rates rise higher than the 4.5% anticipated for now,” he said.

Against this backdrop, and despite gloomy global growth forecasts, the safe haven is struggling to regain value.

“The market’s attention remains on rate hikes and not the inevitable costs to the economy,” says Ole Hansen, an analyst at Saxo Bank, who believes gold could potentially benefit from bets on continued inflation even if the rate hike cycle loses momentum .

An ounce of gold traded for $1,675.07, up from $1,716.83 seven days earlier.

The sugar gasps

Sugar prices fell over the weekend after hitting a 10-year high in London on Thursday, taking a breather as a surge in sugar production at the expense of ethanol stabilized prices in New York.

“The New York market is concerned that the lack of clarity about ethanol demand in Brazil will force local factories to continue producing more sugar for export,” driving prices lower, says Price Futures analyst Jack Scoville group.

Brazil is one of the world’s leading sugar producers and exporters.

“The Brazilian president has cut fuel taxes in Brazil, which is eating into factories’ profit margins,” Scoville continues.

Typically, high oil and fuel prices tempt producers to convert part of their crops into ethanol, reducing the amount of sugar on the market and driving up prices.

“Due to tax changes, factories could produce a lot more sugar over time,” he says.

In London, the market fears sustaining demand as prices rebound to a 10-year high hit on Thursday at $633.00 a tonne of white sugar.

In New York, a pound of raw sugar was worth 17.64 cents for delivery in March, up from 17.83 cents seven days earlier.

In London, a tonne of white sugar for delivery in December was worth $530.20 at the close, up from $588.00 the previous Friday.

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