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War and weather to drive prices in short term

The conflict between Israel and Hamas continued to drive commodity prices this week. Oil prices fell back while gold prices defied the stronger dollar and held steady. Events in the Middle East will probably be the key driver of commodity prices next week but a smorgasbord of macro events and data releases will also be important. We expect both the Fed and the Bank of England to leave rates on hold on Wednesday and Thursday, respectively, and that euro-zone Q3 GDP (Tuesday) will have contracted, which may weigh on energy prices. In contrast, industrial metals prices should get a boost from an improvement in China’s PMIs for October (Tuesday and Wednesday).

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