The latest commodities market outlook from World Bank shows that energy stocks took a hit in November dropping 3.7%. Other commodities, however, jumped 0.9%, with precious metals recording the highest growth margin of 19.4%.
To put all that into perspective, here’s an overview of how major commodities are performing during this period of trade wars and short-term interest rates:
In a recent World Oil Outlook, OPEC noted with concern what it termed as “signs of stress in the global economy”, a statement that is expected to trigger a decline in the demand for Crude Oil.
According to the OPEC report, the global demand for oil will stand at 104.8 barrels per day by 2024 and 110.6 million barrels per day by 2040. The forecast suggests that there will be a slowed growth (or demand for that matter) from today’s 100.3 million barrels per day.
At the moment, oil prices are expected to remain bullish following news of a possible deal between China and the US. A report by oilprice.com indicated that Hedge funds are also betting their money on Crude Oil, hoping that the trade war will soon come to an end.
Away from the China-US trade deal, geopolitical risk in the Middle East has been rising, causing a temporary rise in demand for oil. Following an attack on Aramco’s oil facilities in September, there has been bad blood between Iran and Saudi, with the tension likely to trigger a disruption in the supply chain of oil.
It appears Platinum would be a great buy in the short-term, according to analysts. The commodity is expected to surge in the short-run and decline in the medium-term.
Its price is expected to decline to $835.356 from $881.5 within the next year. However, experts predict a wildly bullish Platinum in 2021 and 20222.
Traders can take advantage of that and buy now as they speculate the big moves in late 2020 going to 2021. Known for its strong correlation with Gold, Platinum’s price is most likely going to be boosted by the current market uncertainties.
Unlike most other commodities, the value of Gold rises with rising global uncertainties since it is considered to be a safe haven asset.
Gold has little to no correlation with interest rates – meaning the price of Gold is expected to remain bullish even with the changes in the Fed’s interest rates.
WisdomTree equity and commodity strategist Aneeka Gupta predicts a stable Gold price of $1,460 on average, until June next year.
The ongoing trade war is also boosting the price of Gold as investors are looking to preserve the value of their assets. Kitco Metals director Peter Hug said that 2020 is likely to be an extremely volatile year, and investors are expected to seek solace in Gold and other precious metals.
What’s more? Some analysts believe that the price of Gold will hit $1,800 an ounce by March 2020.