Commodity prices have climbed following the Fed's decision. Photo: AA

According to Turkey's Anadolu news agency on September 23, the global commodity market witnessed a strong increase in prices after the US Federal Reserve (Fed) decided to cut interest rates by 0.5 percentage points, a sharper reduction than many expected, at its meeting in September this year.

This is the first time in four years that the Fed has taken this measure to reduce inflationary pressures and boost economic growth. The interest rate cut not only affects financial markets but also stimulates the price increase of many commodities, from precious metals to energy and agricultural products.

When interest rates fall, the cost of borrowing falls, making it easier for businesses and investors to expand production and consumption. This leads to increased demand for raw materials and commodities in the global market. In addition, low interest rates also reduce the attractiveness of fixed-income assets such as bonds, causing investors to shift to riskier assets such as commodities and precious metals.

Fed Chairman Jerome Powell has stressed that while inflation risks have eased, risks to the labor market have increased. Meanwhile, the prospect of avoiding a recession has encouraged many investors to take on more risk, pushing up commodity prices.

Precious metals: Gold and silver prices rise sharply

Gold prices hit a record high of $2,658.80 an ounce following the rate cut announcement, up 1.7% from the previous week. Lower interest rates reduce the opportunity cost of holding non-yielding gold, prompting investors to flock to the precious metal as a safe haven. Many experts predict that gold prices could continue to rise to $2,900 an ounce in the near future.

Silver prices also rose 1.5%, helped by a recovery in industrial and investor demand. However, not all precious metals saw gains. Platinum fell 2%, while palladium edged down 0.1%.

In base metals, copper rose 2.7% on expectations of increased demand following the Fed decision. Copper is a key metal in industrial production and construction, so any signs of economic growth could boost prices. Aluminum also rose 0.8% on concerns about supply disruptions after an alumina refinery in India suffered a breakdown.

In addition, nickel prices rose 3.4%, while lead edged up 0.1%. However, zinc prices fell 1.2% due to weak demand from processing industries.

Energy: Crude oil and natural gas prices rise sharply

Brent crude oil prices rose 3.2% on concerns about disruptions to US oil production as Hurricane Francine made landfall. At the same time, the US Energy Information Administration (EIA) reported that crude oil inventories fell by 1.6 million barrels, far exceeding market expectations, further pressuring oil prices.

Natural gas prices also rose 6.6%, largely due to geopolitical tensions in the Middle East and major producing countries. These factors not only disrupted supply but also fueled concerns about the ability to meet energy demand in the near term.

Among agricultural commodities, sugar prices jumped 13.6% due to drought and extreme heat in Brazil, the world's largest producer. In addition, coffee prices hit their highest since September 2011, but then fell 3.4% over the weekend due to pressure from exporters.

Soybeans also rose 0.6% on concerns about dry weather in the United States, while rice and corn rose 0.6% and 2.8%, respectively. Wheat fell 4.4% on hopes that geopolitical tensions between Russia and Ukraine would ease, helping stabilize supplies.

In summary, the Fed’s 0.5 percentage point rate cut has had a significant impact on commodities markets, from precious metals to energy to agricultural products. With low interest rates and the prospect of avoiding a recession, investors are increasingly looking for opportunities in commodities. However, volatility remains, and factors such as geopolitical tensions, natural disasters, and supply disruptions will continue to influence prices in the near term.

According to baotintuc.vn