“The rise of geopolitical tensions with Nancy Pelosi’s controversial visit to Taiwan has benefited gold”, a safe haven, said Han Tan, an analyst at Exinity.
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The price of gold saw its rise slow over the week, peaking at a high in a month on Thursday before ending Friday at its level on Monday.
The precious metal has benefited over the week from concerns over global growth, its peak at $1,794.97 an ounce on Thursday coinciding with the forecast of a British recession in 2023 by the Bank of England.
In addition, “the rise of geopolitical tensions with the controversial visit of Ms. Pelosi to Taiwan has benefited gold”, a safe haven, adds Han Tan, an analyst at Exinity.
Relations between China and the United States are at their lowest in years after the visit of Nancy Pelosi, Speaker of the House of Representatives.
But gold’s gains were swept away by the unexpected drop in unemployment in the United States on Friday, which reinforces the idea that the United States Federal Reserve will raise rates again.
The prospect of higher rates makes government bonds more attractive, which weighs on investors’ interest in gold, another safe haven.
In addition, “there is resistance at the symbolic threshold around 1,780-1,800 dollars which prevents gold from rising excessively”, comments Craig Erlam, analyst at Oanda.
Around 2:45 p.m. GMT (4:45 p.m. in Paris), an ounce of gold traded for 1,776.68 dollars, against 1,765.94 dollars seven days earlier at the end of the session.
Zinc in shape
Zinc prices rallied over the week on the London Metal Exchange (LME), hitting their highest level in more than a month on Thursday, as the ongoing energy price crisis poses a significant threat to the zinc supply in Europe.
“The tight energy supply situation in Europe led to a sharp rise in the price of zinc” on Thursday, explains Carsten Fritsch, an analyst at Commerzbank.
The metal jumped more than 5% during the session, its biggest rise since March, reaching 3,554 dollars per ton, its highest since the end of June.
Analysts said Thursday’s spike was linked to Swiss commodities trading giant Glencore, which noted in its first-half results the tightness of the market, and mentioned the likelihood of further cuts in European production.
“The company has already mothballed one of its zinc smelters in Europe,” says Carsten Fritsch.
“Its other zinc smelters in Europe are currently making virtually no profit, which means that further production cuts could be considered,” he continues.
Europe accounts for around 30% of metal production outside China, according to analysts at Sucden Financial.
On the LME, a ton of zinc for delivery in three months traded at 3,469.00 dollars on Friday around 2:45 p.m. GMT (4:45 p.m. in Paris), against 3,308.50 dollars the previous Friday at the close.
Cocoa holds up
Cocoa prices faltered during the week, caught up in fears of a global recession eroding demand, alongside excess supply, before trying to recover.
“There is no constraint on supply and fears of recession have the potential to dampen demand,” said Michael Hewson, analyst at CMC Markets.
Sucden Financial analysts also point to “strong volumes”.
There should still be excess supply, curbing a rise in prices, with weather conditions maintaining the prospect of “big production in Côte d’Ivoire”, “good production in West Africa for the year”, but also in Southeast Asia, according to Price Group analyst Jack Scoville.
In London, a ton of cocoa for delivery in December was worth 1,782 pounds sterling around 2:45 p.m. GMT (4:45 p.m. in Paris), against 1,760 pounds sterling last Friday at the end of the session.
In New York, a ton for delivery in December was worth at the same time 2,369 dollars, against 2,373 dollars last Friday.
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