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Commodity market recap: Gold, oil, and interest rates surge

Gold, oil, and interest rates dominated commodity markets last week as all three surged for a mixture of reasons. The US dollar was stronger as well, yet the stronger greenback and higher rates failed to have their usual negative impact on the prices of these two key commodities.

Gold attracted safe-haven buying for a second week. The US dollar was stronger due to safe-haven buying, but US Treasury bond yields surged 30 points (for the key 10-year note) when you would have expected safe-haven demand to send yields lower.

Oil was stronger, topping $US90 a barrel for US crude at one stage, due to the Israel-Hamas fighting.

These reasons won’t go away this week, especially with the key Fed meeting next week and some important inflation and economic growth data for the US due later this week.

The European Central Bank is expected to leave rates unchanged at a meeting this week, and some analysts see that as a guide to what the Fed will do next week, especially with an effective rate rise in the market and the key 10-year bond yield close to 5% and 16-year highs.

US marker crude, West Texas Intermediate, fell 62 cents to settle at $US88.75 (and then rose to finish the week at $US89.02 in after-hours trading). That left it up around 1.5% for the week.

Brent crude, the global standard, rose 0.4% to $US92.51 a barrel on Friday and ended the week up more than 1.9%.

The US oil and gas rig count rose two to 624 in the week to October 20.

US oil rigs rose by one to 502 this week, while gas rigs also gained one to 118.

Despite this week’s rig increase, Baker Hughes said the total count was still down 147 or 19%, below this time last year.

Comex gold futures rose $US13.90 to settle at $US1,994.40 an ounce.

Last week, it jumped more than 3%, and is up more than $US160 since the terrorist group Hamas attacked Israel on October 7.

Prices in the December and February contracts on Comex topped $US2,000 an ounce on Friday, and the February price remained over that key level into the weekend.

This safe-haven demand has pushed gold prices to their highest level in three months.

The Australian dollar price hit a series of all-time highs last week, topping out at more than $A3,152 an ounce before settling back to $US3,138.

Iron ore prices fell with the SGX November futures price down $US2 a tonne to $US112.65 while the SGX futures price for Australian premium coking coal eased around $US15 a tonne to $US319 a tonne on Friday.

Australian thermal coal futures (the November contract) fell 5.1% to $US143 a tonne on the ICE futures market.

Comex copper prices eased half a percent last week to $US3.55 a pound as China’s September economic data release failed to inspire, and property activity remained very weak.

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