Expectations that the period of monetary tightening in commodity prices will end and incentives regarding China accelerated the upward momentum.
Iron ore, which fell for the first time in the last eight sessions as of Friday, started to rise again in the new week with the expectation that China will give more incentives and the previously announced measures will start to be reflected in the market.
Iron ore entered the new week with an increase of over 2 percent, after increasing by more than 14 percent during the previous four weeks.
Beijing’s promises to issue more government debt, with funds partly earmarked for construction, and to provide low-cost financing for affordable housing have been a key driver of the rally.
In China, the central bank kept benchmark lending rates constant in line with its decision to opt for other types of incentives. Additional easing is likely, but measures will likely focus on stimulating credit growth rather than lowering borrowing costs, Bloomberg Economics Economist Eric Zhu said.
Fed rally in copper
Copper also posted its biggest weekly gain since July as industrial commodities benefited from growing optimism that the Fed’s rate hikes will end.
Investors are increasing their pricing that the Fed’s tightening cycle is over after a string of US data showed the world’s largest economy is slowing.
Copper rose to 8 thousand 333 dollars per ton on the first trading day of the new week. Prices on the London Metal Exchange rose 2.9 percent last week.