Gold, cocoa, silver and oil… Record increase in commodity prices in the first quarter – Last Minute Economic News

While the global economic recovery and geopolitical developments provide a strong performance in the commodity market in the January-March period, the fight against inflation may be negatively affected by this situation.

In addition to the ongoing Russia-Ukraine war, Israel’s continued attacks on the besieged Gaza Strip stand out among the geopolitical developments affecting the commodity market.

Analysts state that, in addition to geopolitical developments, progress in the process of controlling inflation in the USA and Europe and, in parallel, expectations that interest rate cuts will begin this year are among the factors that support commodity prices.

On the other hand, the increase in prices in the commodity and raw material markets indicates that economies are still strong, but at the same time, high inflation may persist for a while longer.

Inflation remaining far from targeted levels may also lead central banks in leading economies, such as the US Federal Reserve (Fed), to not reduce interest rates for a longer period than expected.

A RECORD WAS BREAKED IN THE PRICE OF GOLD

The ounce price of gold, which is among the commodities whose demand and price are most determined by geopolitical developments, reached the highest levels in history in the first quarter of this year.

The ounce price of gold, which started the year at 2 thousand 72 dollars, completed March 31 at 2 thousand 257 dollars, increasing by nearly 9 percent in the first quarter.

Gold, where the ounce price reached consecutive record levels in the first quarter; As countries such as China, Turkey and India continued their purchases, it last broke the record by rising to 2 thousand 382 dollars on April 9.

While China, in particular, has been purchasing gold to support its reserves for 17 consecutive months among the gold-buying countries, the gold in the country’s reserves reached the highest level since November 2015 last month.

In the report titled “Gold’s hot run continues” published by ING on April 8, it was stated that investor interest has now returned to gold and the following evaluation was included:

“Gold becomes more attractive in times of instability when investors turn to safe haven assets to hedge against economic conditions, geopolitical tensions or inflation. “We think this situation will continue for the rest of the year.”

While silver started the year at 23.3 dollars per ounce, its price rose to 25 dollars at the end of March.

Analysts point out that there have been periods in the past when the price of silver has lagged behind gold for a long time, and that changes in the price of gold may also affect the price of silver.

THERE WAS APPROXIMATELY 14 PERCENT INCREASE IN OIL

There was also an increase in the global price of oil, which is in demand all over the world, in the first quarter.

While the barrel price of Brent type crude oil increased from 78 dollars to 89 dollars in the first quarter, geopolitical developments as well as the steps taken by the producing countries are effective in this area.

The rise in the price of oil, which is used as raw material in production as well as transportation, also negatively affects inflation.

While Ukraine’s attacks on oil refineries in Russia were effective in increasing oil prices in the first quarter, the increasing tension in the Middle East due to Israel’s attacks on Gaza also causes an upward movement in prices.

While Ukraine affected the production in many Russian refineries with its drone attacks in the first quarter, Russia also restricted fuel exports as a measure for the domestic market.

In addition, the steps taken by the OPEC+ group, consisting of the Organization of Petroleum Exporting Countries (OPEC) and some non-OPEC producer countries, to cut production also affected the price movements in the first quarter.

THE RISE IN COCOA PRICE DRAWED ATTENTION

Cocoa stood out in the commodity market due to the rapid increase in its price at the end of the first quarter.

Cocoa prices broke records as major cocoa factories in Ivory Coast and Ghana decided to cut or stop production because they could not afford seed costs.

The harvest is expected to decrease significantly in Ivory Coast, the most important cocoa producing country. The country meets approximately 45 percent of the world’s cocoa supply.

Yields in other cocoa producing countries such as Nigeria and Ghana are also well below expectations.

It is estimated that the interim harvest, which will start in April, will be lower than last year due to the heat and drought affecting the development of cocoa beans.

The price per ton of cocoa for May delivery traded on the New York Mercantile Exchange reached an all-time high of $10,075, an increase of approximately 4.6 percent on March 26. The price of the commodity was approximately 4 thousand 300 dollars at the beginning of the year.