Gold prices high, iron ore steady gains: Report
HIGH gold prices, continued gains for iron ore and the promising gains for coffee and cocoa were the highlights for the commodity markets in June, according to a Kina Bank’s June economic synopsis.
“Gold has increased in demand as the US Federal Reserve is expected to cut interest rates,” the report said.
“The European Central Bank has already cut interest rates to negative figures and central banks around the world are lowering rates near or equal to zero.
“The value of gold is also boosted by the current geo-political climate, with uncertainties surrounding the US-China trade war and escalating tensions with Iran threatening stability in the Middle East.
“Investors looking to shield their portfolios in the current global investment climate are buying heavily into gold, driving up prices to US$1,418.7 (K4,798.65) per ounce (28.34g).
“The price of iron ore continues its steady ascent, accelerating in late June as importers fear a supply crunch.
“Brazilian miners, Vale, continue to face legal and public backlash after an incident in Brazil in November last year left over 300 people dead or missing and halted production to one of the world’s most productive mines.
“Given this was the second incident involving a Vale mine to occur in three years, the courts intervened to close down Vale operations due to safety concerns until investigations can be completed.
“Towards the end of June, domestic inventories of iron ore in China were reportedly at their lowest levels in two years.
“China’s demand continues to grow backed by government stimulus leading to fears that demand would outpace supply.
“The shrinking global supply and increasing Chinese demand have placed upward pressure on iron ore prices accelerating the 59.9 per cent YTD (year-to-date) price hike as at the end of June.”
The report said after going into a tailspin since last November, coffee prices had shown promising signs of recovery.
“Bountiful harvests of coffee in Vietnam, Brazil, and other leading suppliers have resulted in a supply glut on the world market,” it said.
“Coffee prices have normalised in June, with this month’s increase brining YTD price movements to 8.1 per cent.
“Cocoa posted a very strong performance as changing tastes and increased consumption of chocolate in Asian markets drive demand.
“Cocoa registered its highest price for the year in June at US$2,568 (K8691) per ton and a monthly average price of US$ 2,486 (K8,414) per ton.”