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Copper prices edged closer to the US$14,000-per-tonne mark while aluminium surged to its highest level in more than four years, buoyed by escalating tensions in the Middle East and renewed optimism over global demand prospects.
According to Zanaco’s latest market commentary, base metals had started June on a strong note as investors anticipate tighter global supplies amid geopolitical uncertainty and resilient industrial demand.
The rally in commodities comes as hostilities in the Middle East continue to unsettle global markets.
Oil prices extended gains on Wednesday after Iran reportedly fired missiles at Kuwait and Bahrain, while diplomatic efforts between Tehran and Washington showed little progress.
Read more: Improved Kwacha, rise in copper prices boost investor confidence as US-Iran peace talks progress
Brent crude futures rose 0.8 percent to US$96.81 per barrel, while U.S. West Texas Intermediate (WTI) crude climbed 1.0 percent to US$94.67 per barrel.
Meanwhile, gold prices retreated slightly as investors weighed the impact of rising oil prices and awaited key U.S. economic data.
Spot gold slipped 0.3 percent to US$4,471.38 per ounce after posting gains of more than one percent in the previous session. U.S. gold futures for August delivery also declined 0.5 percent to US$4,499.30 per ounce.
On the domestic market, the Zambian Kwacha continued its upward trajectory against the United States dollar, supported by strong foreign exchange inflows and relatively subdued demand.
The local currency opened trading at K18.150/18.200 per US dollar before strengthening to close at K17.950/18.000.
Zanaco attributed the appreciation to sustained excess supply in the foreign exchange market, noting that inflows continued to outweigh demand for hard currency.
“The move was largely driven by sustained excess supply in the market, with FX inflows continuing to outweigh demand,” the bank said in its commentary.
The lender expects the Kwacha to remain stable in the near term, trading within a similar range as favourable supply conditions persist.
In the money market, liquidity remained adequate, with commercial banks’ current account balances standing at K508 million. The weighted average cost of overnight interbank funds was recorded at 13.50 percent.
To support activity in the foreign exchange market, the Bank of Zambia purchased K1.18 billion through Open Market Operations, underscoring efforts to maintain stability in the financial system.
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