industrial metals, gold and cocoa under pressure

Prices of industrial metals, including copper, a barometer of the global economy, fell on the London Metal Exchange (LME) this week, weighed down by a slump in demand and a strong dollar. †One of the factors weighing on metal prices is the strength of the US dollar, which is already appreciating after a short correctionA strong dollar weighs on the purchasing power of investors using other currencies, explains Daniel Briesemann, an analyst at Commerzbank. †Lockdown measures remain in place in China, weighing down the economy and dampening demand for metals“, the country is a major consumer of industrial metals, Daniel Briesemann recalls. Aluminum fell to a four-month low on Friday at $2,832.50 a ton.

Supply risks from the war in Ukraine are currently completely ignored» estimates the analyst. The expert also mentions an increasing supply of copper,”thanks to significantly higher mining production, for example in the Democratic Republic of Congo, Peru and Chile“. The demand for copper is not expected to increase.”It will be held back by the weaker economic growth expected in the context of the war in Ukraine and by the negative effects of the containment measuresin China, Daniel Briesemann recalls.

Widely used in industry, especially for making electrical circuits, copper is known to reflect the health of the global economy, hence the nickname Doctor Copper (Dr Copper). On the London Metal Exchange, a tonne of aluminum for delivery in three months traded at $2841.00 at around 3:30 PM GMT (5:30 PM in Paris), down from $3,052.50 the previous Friday at the close. A tonne of copper for delivery in three months traded for $9,426.50 Friday, up from $9,769.50 a week ago at the close.

The price of gold is falling

The price of gold fell on Monday in a bid to recover during the week, but remained dragged down on the prospect of further policy tightening by the Fed. Federal Reserve President Jerome Powell ruled out an even stronger monetary policy tightening and a 0.75 percentage point hike at his next meeting on Wednesday. †Gold failed to take advantage of softer-than-expected message from Fed Chair Jerome Powell this week as investors know US interest rates will rise anywaycomments Han Tan, analyst at Exinity. †Tangible assets like gold are a hedge against runaway inflation“, explains Stephen Innes of Spi Asset Management.

However, rising inflation is forcing the US Federal Reserve (Fed) to tighten its monetary policy. This drives up yields on US bonds, which compete with gold as a safe haven.”When the Fed eventually raises interest rates enough to stop mounting inflationary pressures, investors will no longer need this protection.the analyst continues. At around 3:30 PM GMT (5:30 PM in Paris) Friday, an ounce of gold cost $1,890.47, up from $1,896.93 the previous Friday at the close of the session.

Bitter week for cocoa

In London, cocoa peaked on Tuesday at its highest point since October 2021, before falling sharply in the days following, as prices in New York fell over the course of the week. For Jack Scoville, an analyst for Price Group, Tuesday’s move is explained by a “speculative purchase“. But prices were overtaken by fear of demand.”New York Cocoa experienced a major bearish move», comment the analysts of Societe Generale in a note. Cacao “was swept by concerns about demand disruption in China as a result of the outbreakof Covid-19 hitting the country that had been spared for two years, they explain. †While the market expected US consumption to improve, weak US milling data, a demand indicator, also cast doubt on the outlook for broad bean demand.the analysts added.

In London, a tonne of cocoa for delivery in December was worth 1,801 pounds sterling (2,102 euros) around 3:30 PM GMT (5:30 PM in Paris), compared to 1,817 pounds sterling last Friday at the close of the session. In New York, a ton for delivery in July was worth $2469 at the same time, up from $2567 last Friday.

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