Commodities generally fell as Concerns are growing over the prolonged lockdowns in Shanghai and possible interest rate hikes by the Federal Reserve that would hurt growth and global demand.
The metal, used in vehicle exhaust to reduce emissions, has fallen nearly 40% since hitting an all-time high in early March. on concerns that the war in Ukraine could cut supply from key producer Russia.
“Much of the angst in palladium is related to potential problems with the Chinese economy,” said Bart Melek, head of commodity strategies at TD Securities.
Meanwhile, spot gold fell 1.8% to $1,898.95 per ounce. “It seems that fears about rate hikes have prevailed lately,” said Julius Baer analyst Carsten Menke. “We would think that inflationary pressures are about to subside and that should remove some of the safe-haven demand for gold.”he added.
Although bullion is seen as a hedge against skyrocketing inflation and uncertainties such as the war in Ukraine, rising interest rates reduce their attractiveness by increasing the opportunity cost of holding a noninterest-bearing asset. As a counterpart, the US dollar has been strengthening globally.
Among other precious metals, platinum fell 1.5% to $913.50, after hitting a low since December 2021. Silver lost 2.2% to $23.72 an ounce, after trading at a low of more than two months.
Oil sank below $100 in the US
For reasons similar to those of the metals decline, the price of crude oil lost more than 3% on Monday and hit a two-week low.
In Shanghai, authorities erected fences outside residential buildings, sparking new public protests. In Beijing, many began stockpiling food, fearing a similar lockdown after a few cases emerged.
In this context, a barrel of Brent crude fell US$4.33, or 4.1%, to US$102.32, while that of West Texas Intermediate in the United States (WTI) fell US$3.53, or 3.5 %, $98.54.
Contracts had lost nearly 5% last week. Since soaring in early March to their highest since 2008, prices have fallen by around 25%.
“Shanghai shows no signs of abandoning its strict ‘Covid-19 zero’ policy, instead promising to tighten enforcement of restrictions, which could further hurt oil demand,” City Index’s Fiona Cincotta said of the report. city in China, the world’s largest oil importer.
Crude oil also weakened on the prospect of higher rates in the United States, which is boosting the dollar. A strong US currency makes commodities more expensive for buyers with other currencies and tends to reflect greater risk aversion among investors.
Source: Ambito
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