Commodities weekly: Sentiment improves as trade tensions cool before talks – Saxo Bank MENA
Easing trade tensions was the predominant red thread through markets this past week, starting with news that US Treasury Secretary Scott Bessent and Chinese Vice Premier He Lifeng would meet for talks in Geneva this weekend. Market risk sentiment was further boosted by President Trump hinting that the 145% tariffs on Chinese imports could come down immediately.
Earlier in the week, the United Kingdom became the first country to reach a trade deal. Although the details have yet to be hammered out, the development raised hopes that similar agreements could be concluded with South Korea, Japan, and India. However, Commerce Secretary Howard Lutnick warned that these deals will take much longer to finalise than the UK framework.
While expectations may be overly optimistic for significant developments—at least in the short term—these announcements nevertheless helped trigger a broad, albeit relatively small, weekly rebound in the USD. Global equity markets also rallied, with one spanner in the works being rising US Treasury yields, as haven demand stalled.
Following a challenging April, when tariff turbulence and economic growth concerns saw the Bloomberg Commodities Index decline by 4.8%, the index—just like other asset classes—has been finding its feet again, with early May action driving a 1.4% gain, led by pro-cyclical and growth-dependent sectors, as trade optimism gave the energy and industrial sectors a boost. Precious metals, including silver, continue to attract Chinese investors and some haven demand, as geopolitical risks persist—most recently between India and Pakistan.
Elsewhere, broad gains across industrial metals were partly scuppered by weakness in New York-traded HG copper, after the tariff premium over London collapsed to 6.5% from a recent high around 15%. The agricultural sector is seeing broad losses, with good planting weather and growing conditions in the United States adding downward pressure on corn and wheat. USD beef prices hit fresh record highs on tight supply, while sugar bounced from a long-held area of support.
On an individual level, losses were led by corn, coffee, and copper, with gains at the other end being led by European and US natural gas, crude oil, and gasoline. Gold, despite suffering a setback after failing to gain a foothold above USD 3,400, was nevertheless heading for its highest weekly close on record.
Last Updated on 4 days by PR News Desk
