Gold and silver are rallying after a five-year drop starting in 2011. Government bonds and even corporate bonds are making major gains in popularity. Now even copper is making a comeback which is expected to continue as both investor sentiment and government policies push the commodities sector up.
Earlier in the week, London trading, copper jumped to a two-month high as central banks across the world reiterated their support of significant monetary easing policies to quell global economic concerns. The three-month copper future in London jumped to $4,933 a metric ton, a 0.56 percent gain. The commodity has enjoyed daily gains consecutively since June 24, the day after the Brexit vote. Investors are likely responding to multiple announcements from major central banks who have come out in support of continuing and possibility even increasing monetary stimulus measures to encourage investment, increase inflation and attempt to cure rising nonperforming loan issues.
Other commodities are also enjoying gains. Crude oil has been floating just below the important $50 a barrel mark. Although supply remains high while demand has been sluggish, investors do not expect a major drop in the short-term. Aluminum made gains of 0.48 percent to $1,666 a ton, ticked up by 0.56 percent and nickel jumped 2.88 percent. Analysts are also closing watching the US and China, the two largest economies in the world. Demand from China remains sluggish, which may put downward pressure on commodity prices shortly. Additionally, strength in the US economy may lead to further gains in the dollar. Should the dollar continue to be used as a safe haven investment, the cost of commodities will consequently increase alongside the currency, which may lead to lower demand for more expensive goods.