U.S. Stock Market Surge Continues, USD Pullback Boosts Gold Prices, and Arabica Coffee Hits Highest Monthly Gain in a Decade

The excitement in U.S. stocks shows no signs of slowing down. Meanwhile, the USD cooled off, helping gold prices recover over the week. Arabica coffee prices posted the largest monthly gain in a decade.

At the end of November, the S&P 500 index rose by 0.56%, closing at 6,032.38 points. The Nasdaq Composite gained 0.83%, reaching 19,218.17 points, while the Dow Jones rose 0.42%, finishing at 44,910.65 points. For the month, both the Dow Jones and S&P 500 recorded their best monthly gains of 2024.

Regarding the European Central Bank's (ECB) interest rate policy, there is a possibility that rates may be lowered further in December to support the slowing regional economy. Meanwhile, in the U.S., former President Donald Trump threatened to impose up to 100% tariffs on BRICS countries if they don't use the USD. The BRICS group, which consists of emerging economies, represents 40% of the world's population and around a quarter of global GDP.

As of the close on November 29, spot gold futures increased by 0.7% to $2,660.28 per ounce, while gold futures rose 0.7% to $2,684.9 per ounce. For the month, gold saw a decline of more than 3% as the USD strengthened following the U.S. elections.

In terms of the USD, the currency dropped to a two-week low last week, although it recorded a monthly increase of 2%.

Meanwhile, oil prices also fell. For the week, Brent crude dropped nearly 3%, while WTI futures fell about 4.6%. The OPEC+ group, which includes the Organization of the Petroleum Exporting Countries (OPEC) and Russia, delayed its next policy meeting from December 1 to December 5. OPEC+ is expected to decide on an extension of production cuts at this meeting.

Arabica Coffee Posts Largest Monthly Gain Since 2014

In November, Arabica coffee futures saw the largest monthly increase in over a decade. This surge was driven by concerns over global supply and fears that exporters might face financial stress. Two Brazilian companies filed for a 60-day extension in a local court this week while renegotiating with creditors.

The sharp rise in coffee prices also means that exporters will face higher hedging costs due to increased margin calls. Part of the recent price increase can be attributed to market participants reversing their hedge positions, buying futures contracts to close out short positions.

On Friday, Arabica futures in New York were still on track for a more than 30% increase in November, nearing record highs. Prices for specialty coffee varieties have risen by around 70% this year.

A severe drought earlier this year in Brazil, the world’s largest coffee producer, raised concerns about the country's upcoming harvest. These worries were compounded by fears that the cheaper Robusta coffee, which is widely grown in Vietnam, might also be affected by weather conditions, including dry spells during planting season and heavy rains at harvest time.

Steve Pollard, a coffee market analyst at Marex Group, stated, "Two years of global production below consumption have left stocks in producing countries about one-third lower than the long-term average." Initial reports for Brazil's 2025/26 coffee crop indicate another annual production decline, meaning there will be no relief for target markets in the near future.

Source: SFVN (Compiled)