The mood was upbeat in commodity markets this week, with prices rising across all sectors. Oil stood out, with the price in the US cracking $90 per barrel for the first time this year. Higher oil prices gave a lift to most agricultural prices and industrial metals were boosted by robust economic activity data for August from China. Gold was one of the few commodities that was not caught up in the exuberance, and we think prices will slide from here as investor demand fades.
Next week, all eyes will be on the monetary policy announcement in the US and loan prime rate decision in China (both Wednesday) where we and the market expect interest rates to be left unchanged. In the case of the US, if we are correct, the impact on commodity prices is more likely to come from clues about where monetary policy will go at the Fed’s next meeting.
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