Commodity markets have been volatile as high interest rate environment continues amid rising inflation and recession concerns.

As part of efforts to rein in soaring inflation, central banks of the UK, Norway, Switzerland, Taiwan, South Africa, Indonesia and the Philippines have made aggressive interest rate hikes recently.

The turmoil experienced in the bond and foreign exchange market came to a halt, albeit temporarily, after the Bank of England announced its bond purchase move.

Another positive development was the British government’s move to scrap a proposed tax cut for high-earners which saw the British pound rise sharply on Monday morning before dipping to $1.1212 by 7:30 a.m. London time after the news was confirmed.

Last week, the British pound plummeted against the dollar, falling 1.6% to $1.0538 despite Bank of England’s intervention in the bond market.

A Bank of England statement said temporary purchases of long-term UK government bonds started in order to restore the functioning of the market.

The increased risk appetite after the loosening in the bond market showed its effect in the foreign exchange market, while the pressure on commodity prices decreased with the decline in the dollar index.

The dollar index fluctuated at 112.2 from a 20-year high of 114.8.

Some commodities rose with the news of fresh European sanctions against Russia.

The ounce price of gold closed the week at $1,662 with an increase of 1.1% after seeing the lowest level since April 2020 with $1,615 last week.

Analysts said gold prices rose due to the dollar’s depreciation versus emerging market currencies and commodities after the BoE’s bond purchase program and the European Central Bank (ECB) officials’ market guidance with hawkish tone.

Silver gained 0.9%, platinum 0.7% and palladium 4.7%.

In the over-the-counter market, copper rose 1.2% and lead 1.8%, while aluminum fell 0.8%, nickel 8.9% and zinc 2.2%.

The increase in nickel production in Indonesia caused a depreciation in nickel prices.

On agricultural commodities side, wheat traded on the Chicago Mercantile Exchange rose 4.7 % and corn gained 0.1%, while rice and soybeans fell 1.2% and 4.3%, respectively.

Coffee increased by 0.5%, sugar by 0.2% and cocoa by 4.8%, while cotton decreased by 8%.