We are facing a significant macro week that will undoubtedly impact the movement of commodity markets and trading in the coming weeks. A key event will be the release of inflation data in the U.S., the last before the FED meeting next week. The market expects an inflation rate of 2.9 percent year-on-year.
If the data comes in slightly lower than expected, it could increase the likelihood that the FED will lower interest rates next week, which would lead to weakening of the dollar and rise in commodity prices. Conversely, of course, if the inflation data exceeds market expectations. At the same time, inflation in the Eurozone stands at 2.1 percent.
Despite the war in Ukraine, rising tensions in the Middle East and the Caribbean, and increasingly difficult refinancing of state debt in fiat currency, there is a sense that something will happen, given many common interests. It is still unclear how China, Russia, and India will unite against Trump. Time will tell, but they are certainly trying to show some unity to the world.
India does not hesitate to admit that it will continue to import Russian crude oil, and what is particularly intriguing is the fact that Trump has yet to discipline China for its efforts to purchase Russian crude oil.
The Rise in Gold Prices Squeezes the Dollar and Euro
From energy to agriculture and metals, commodities remain the backbone of the global economy and international trade. The ten most traded commodities in 2025 are: crude oil, coffee, natural gas, gold, wheat, cotton, silver, copper, corn, and sugar. Energy continues to dominate global markets, agriculture is crucial for food security and international flows, and metals balance industrial demand and safe investments.
Gold prices last week broke all records, surpassing $3600/oz, recording gains of over 1 percent just on Friday, or 5 percent in the last 30 days, 21.5 percent in the last six months, 84 percent in five years, and 700 percent since 2005 when the rise began.
The rise in gold prices was accompanied by an increase in the value of major gold producers, with the NYSE Arca Gold Miner’s index on track to set new records, and mining companies like Agnico Eagle, Barrick Mining, Newmont, and Wheaton rising by 80 to 105.5 percent since the beginning of 2025, compared to about 10 percent for the S&P 500.
The rise, which Bloomberg attributes to trade concerns, geopolitics, and perceived threats to the FED’s autonomy, could signal something much broader: the imminent end of the dollar’s status as the de facto world reserve currency. In the past three years, the dollar has lost 50 percent of its value against gold, and the euro has not fared much better.
Unless Europe reconsiders its reliance on ongoing central bank stimulus and renews market discipline mechanisms, the current French crisis could be just one of many future fiscal storms.
The success of the euro as a reserve currency has rested on pillars of prudence and fiscal responsibility. A lack of fiscal discipline always poses a risk to a currency. Central banks cannot print solvency, and a lack of structural reforms and excessive monetary easing policies could ultimately destroy the euro.
Oil Prices Fall, Gas Prices Stable
On global markets, oil prices fell more than 3 percent last week as traders fear weakening demand, while on the other hand, OPEC+ members are increasing production. The price of a barrel on the London market is now hovering around $65/bbl. After two weeks of moderate price increases, traders are concerned about weakening oil demand, as indicated by a strong rise in inventories in the U.S. at the end of the summer holiday season.
Additionally, the weakening U.S. labor market has further pressured prices. Specifically, it was reported on Friday that in August, the number of employed in the U.S. increased by only 22 thousand, significantly less than the expected 75 thousand. The U.S. labor market has been weakening for months, which means that consumption will also weaken, and thus demand for oil. One interesting note, Syria has exported crude oil for the first time in 14 years. They can thank Trump for that.
Natural gas prices in Europe remained stable, at around €33/MWh, refraining from significant increases since they reached a 15-month low of €30.3/MWh in mid-August in the context of ample supply. The latest data showed that gas storage in the EU is over 78 percent full, maintaining the pace to achieve the bloc’s goal of reaching a minimum of 80 percent capacity by early November, when cooler temperatures increase demand for heating that heavily relies on gas.
The pleasant availability coincided with surveys showing that imports of liquefied natural gas were over 50 percent higher since the beginning of the year, solidifying source security in Europe after the disruption of gas flows from Russia. At the same time, liquefied natural gas (LNG) exports from the U.S. rose to a record level in August as key facilities completed maintenance programs.
However, concerns that supply could falter in the last quarter of the year have prompted some in the market to bet on higher prices amid many open positions in options that profit from increases.
Despite public condemnation of the French leadership regarding Russian actions in Ukraine, the country is experiencing strong growth in consumption of Russian liquefied natural gas. A legitimate question arises: how effective are the imposed sanctions?
In the first quarter of this year, France became the largest importer of Russian liquefied natural gas among EU countries, far exceeding figures for the same period last year. France leads both in absolute import volume this year (1.5 million tons) and in the growth of purchases compared to the same period last year. After France, the largest buyers of Russian liquefied natural gas in the EU are Belgium, Spain, and the Netherlands. All have stated their intention to reduce purchases, but in close cooperation.
Where is the Gas Going?
Before the war, Russia exported 200 billion cubic meters of gas to Europe annually. Half of that gas passed through Nord Stream 1 and 2, with a total capacity of approximately 110 billion cubic meters per year. So where is that gas going now? Through the new Power of Siberia-2 pipeline, 50 billion cubic meters of gas will be sent to China annually. Combined with the Power of Siberia-1 pipeline, which is already operational, and other contracts, Russia will send 100 billion cubic meters to China annually by 2030. This is about half of what Europe previously purchased.
This is important for China because the price is set by a 30-year framework agreement, which in turn reduces their dependence on LNG from the U.S., Qatar, and Australia. China receives cheaper and more predictable gas from the pipeline, while Russia gains a stable customer. There is also Iran. Russia and Iran signed an agreement in 2023 for 110 billion cubic meters of Russian gas annually through Iran. Iran will serve as a regional hub, transporting Russian gas to nearby and global markets. This agreement positions Iran as an energy corridor for Eurasia, offering Russia new distribution channels outside of Europe. Asia and the Middle East heavily rely on spot LNG, but the pipeline hub between Russia and Iran could offer a cheaper alternative, long-term supply, and reduce dependence on volatile shipping rates.
Furthermore, Gazprom has signed a $40 billion memorandum of understanding to assist Iran in developing its vast (and largely untapped) gas reserves. Iran possesses the second-largest reserves in the world. If these were to increase, the Iran-Russia energy axis could shake the entire LNG market.
In the first half of 2025, China has brought online an incredible 21 gigawatts (GW) of coal energy, the largest amount in the first half of the year since 2016. It is estimated that the newly commissioned coal power generation capacity for the entire year will exceed 80 GW.
Globally, China is a leader in installing renewable energy capacity, but it is also a leader in coal energy and continues to be the main driver of global coal demand, which has reached record levels. Furthermore, China is seeking to increase domestic demand and coal prices this year. Coal prices in China have been low this year, impacting the profits and profitability of coal producers. Now all of this needs to be put into the context of the green transition in Europe and environmental protection.
Agricultural Yields Could Fall Due to Drought
On Friday, we expect the USDA report. This is the first yield report in the U.S. based on actual samples from fields collected by surveyors in the field. August was dry, so yields could slightly decline. Agri traders will monitor the mentioned report along with seasonal patterns (the right time for a short position on soybeans!), early harvest results, weather in the U.S., and the current trading dynamics in China.
On a weekly basis, almost all key agri commodities ended in the red. On the CBOT, wheat -2.8 percent, soybeans -2.6 percent, soybean oil and soybean meal also down, corn -0.5 percent. On Matif, corn -5 €/t, and corn -3 €/t. Soybeans are burdened by a lack of Chinese demand for U.S. goods. Wheat is burdened by an abundance of harvest. In the EU, production is estimated at 146 million tons, the highest level in six years. Corn is burdened by an abundance of record harvests in Brazil and the U.S.
Futures prices for copper remain at around $10,000/t. Markets continued to weigh the slowdown in demand against the prospects of lower refining capacities in China. The official NBS PMI indicated a reduction in activity in Chinese factories in August, reflecting the disappointing impact of earlier economic support from Beijing.
Meanwhile, the Chinese government has removed subsidies for facilities that recycle waste copper, supporting the margins of mining refineries that have struggled with negative treatment fees. This has led to futures prices trading slightly above multi-month lows after the U.S. government removed refined copper from the list of customs goods.
