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Commodity markets ended the week with precious metals supported by weak U.S. employment data that reduced expectations for near-term interest rate hikes, while optimism over U.S.-Iran talks and rising inventories pushed energy prices lower.
In the United States, ADP private sector employment rose by 44,000 in July, below expectations. Nonfarm payrolls declined by 23,000, contrary to expectations for an increase of 85,000.
The data strengthened concerns that the U.S. labor market is losing momentum.
Following the employment figures, expectations that the U.S. Federal Reserve (Fed) could raise interest rates in September or October declined significantly, while the probability of a rate hike at the December meeting was priced at 85%.
Despite this, reports that Fed Chair Kevin Warsh was ready to raise rates at the September meeting if inflation came in high, along with hawkish statements from Fed officials, kept uncertainty over monetary policy alive.
The U.S. 10-year Treasury yield fell by about 7 basis points on a weekly basis to 4.65%, while the dollar index declined 0.3% to 99.5.
The decline in bond yields and the dollar supported dollar-priced commodities, particularly precious metals.
In precious metals, easing inflation concerns at the beginning of the week because of reduced tensions in the Middle East supported gains.
Weak U.S. employment data, lower bond yields, and shifting expectations over the Fed's monetary policy also affected pricing.
Expectations that the Fed would pursue more limited tightening than previously expected and discussions over the central bank's credibility supported purchases of precious metals.
Gold and silver posted their strongest weekly performance in the past 28 weeks.
Silver rose more strongly than gold because of its precious metal characteristics, the weaker dollar and increased buying across the precious metals group.
With these developments, silver rose 10.2% on an ounce basis, while palladium gained 8%, gold increased 7.4%, and platinum rose 6.2%.
In base metals, the weaker dollar and concerns over copper supply supported prices, while manufacturing data from China and Europe affected the demand outlook.
In the eurozone, the manufacturing Purchasing Managers' Index (PMI) rose to 51.9 in July, marking the fastest increase in 4.5 years.
The acceleration in economic activity supported the demand outlook for industrial metals.
In China, the manufacturing PMI came in below expectations at 50.9, raising questions over economic growth in the world's largest metals consumer and limiting price gains.
The Democratic Republic of Congo's ban on exports of copper and cobalt concentrate increased supply concerns in copper.
Copper being directed to warehouses in the United States ahead of possible U.S. import tariffs also reduced available supply in other markets.
Copper stocks on the London Metal Exchange fell to their lowest level since mid-February, while the premium gap between the cash copper price and the three-month futures contract, an indicator of a short-term supply squeeze, widened.
Nickel prices declined after reports that an additional production quota had been granted to a mining company in Indonesia strengthened expectations of increased supply.
In over-the-counter base metals markets, aluminum rose 2.8% on a pound basis for the week, while zinc gained 1.8%, copper increased 1.3%, and lead rose 0.5%.
Nickel fell 1.7%.
In oil markets, expectations that a new agreement could be reached between the United States and Iran, producer countries' supply policies and rising U.S. inventories weighed on prices.
U.S. President Donald Trump's statement that negotiations with Iran were going well and that an agreement could be reached soon reduced the geopolitical risk premium in oil prices.
Iranian President Masoud Pezeshkian's statement that Tehran supported the implementation of the understanding reached with Washington on June 14 also strengthened expectations for a diplomatic solution.
The decision by OPEC+, made up of the Organization of the Petroleum Exporting Countries (OPEC) and some non-OPEC producer countries, to increase the production quota for September by about 188,000 barrels per day also pressured prices.
In the United States, commercial crude oil inventories rose by 2.5 million barrels to 407 million barrels in the week ending July 31, contrary to expectations for a decline of 1.2 million barrels.
The increase strengthened concerns over demand.
In natural gas, high production, reduced demand from liquefied natural gas (LNG) facilities, and forecasts for cooler weather affected prices.
According to the U.S. Energy Information Administration, natural gas inventories rose by 33 billion cubic feet to 3.117 trillion cubic feet.
Inventories being 195 billion cubic feet above the five-year average increased pressure on prices.
With these developments, Brent crude fell 8.3% over the week, while natural gas prices in British thermal units declined 4.3%.
In grains, weather forecasts in the United States, crop development, and export data were effective in pricing.
The U.S. Department of Agriculture reported that the share of corn crops rated good or excellent fell by 2 percentage points to 61%, while soybeans remained at 63%.
In wheat, weak U.S. exports and improving spring wheat conditions weighed on prices, while shipment disruptions in the Black Sea limited selling pressure.
In cotton, the decline in the share of the U.S. crop rated good or excellent from 46% to 42%, along with hot and dry weather conditions, stood out.
Sugar prices rose as hot and dry weather in Europe lowered production forecasts and production in Brazil's center-south region decreased by 26.3% year-on-year in June.
Expectations in the global sugar market shifting from a supply surplus to a supply deficit also strengthened purchases.
In cocoa, weather risks caused by El Niño and downward forecasts for next season's production in Ghana and Ivory Coast were effective.
Strong current-season production in Ghana and rising exchange inventories limited gains.
With these developments, rice rose 1.9% per bushel on the Chicago Mercantile Exchange.
Soybeans fell 1%, corn declined 0.5%, and wheat slipped 0.2%.
On the Intercontinental Exchange in the United States, sugar rose 12.5% on a pound basis and cotton gained 3.2%, while coffee fell 0.3%.
Cocoa increased 8.3% per ton.
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