The Conversation (0)
Nov. 21, 2014 11:25AM PST
Overall it was a good week for commodities, which ended on a positive note following China’s interest rate cut on Friday. Gold managed to reach a three-week high, and likewise, silver gained 1.5 percent.
The metal was boosted by China’s announcement that it has cut its interest rates, Reuters notes. The news from gold’s largest consumer spurred expectations that demand for the yellow metal could be on the rise.
“Any measures that accelerate the spending power of the Chinese public are bound to be positive for gold,” Mitsubishi analyst Jonathan Butler said. “(This could mean) additional spending power for Chinese consumers to buy jewelry and investment products.”
Meanwhile, US gold futures for December delivery rose $12.80 to trade at $1,203.70.
Like gold, silver also saw an uptick in price, gaining 1.5 percent and hitting $16.45 per ounce, said Reuters.
On the base metals front, the pendulum has swing, leaving room for the red metal to see an increase in price. Copper for delivery in three months on the London Metal Exchange rose 1.07 percent to trade at $6,736.75 per tonne, Reuters states in another article.
Similarly, copper for December delivery rose 1.4 percent to trade at $3.0605 per pound on New York’s COMEX, as per The Wall Street Journal. The interest cut from China has caused investors to hope copper consumption from the world’s largest consumer will jump as its economy improves as a result of the decision.
“It’s been speculated, but the fact that they finally came out and did it still caught people by surprise,” Bob Haberkorn, a senior commodities broker with RJO Futures, told the Journal. “Lower interest rates make people borrow more money, buy more houses, take on more risk.”
Finally, Brent crude oil rose to $80.40 per barrel on Friday, according to Reuters, on course for its first weekly rise since September.
“Commodity prices have risen across the board, base metal prices in particular, but oil prices as well,” Carsten Fritsch, senior oil and commodities analyst with Commerzbank (OTCMKTS:CRZBY), told the news outlet. “Apparently there is hope that this step (China rate cut) will lift commodities demand.”