“Commodity markets reacted with a decline, especially to the Fed’s statement in June about the earlier tightening of monetary policy. This caused the strengthening of the US dollar and literally washed away in many commodity markets, “says Václav Kučera, an analyst at Colosseum.
Later, however, the Fed partially overturned and some speculators returned to the market. “Over the past week, the US Federal Reserve has reassured markets that it will only raise interest rates when the economic recovery and the improvement of the condition of the US labor market are robust and comprehensive enough,” adds Trinity Bank economist Lukáš Kovanda.
However, commodities will probably no longer become a gold mine. “Commodities seem to be on a steep rise. The optimism about the economic recovery, which was reflected in their steep growth, has nowhere to go and will be corrected. This is also due to the renewed problems with coronavirus, which were no longer anticipated, “says Patria Finance analyst Tomáš Vlk.
Forecasts for the next quarters and years, according to him, usually assume a decline in prices. “On the other hand, there are still a number of restrictions on supplies, which are likely to cause short-term upward fluctuations,” adds Vlk.
The loser of the moon is mythical wood, which is now half as cheap as at its peak less than seven weeks ago. Below are also a number of precious metals, including gold, the price of which has fallen by six percent since the beginning of June. Industrial metals did not do well either. “This was and is a consequence of the Chinese government’s intervention against the accumulation of stocks,” recalls Jiří Tyleček, an analyst at XTB. Copper, for example, has fallen by more than 10%.
However, the story of the decline in commodities is far from universal, and prices often fall from extreme levels, so they are still significantly more expensive than last year. “The decline in prices mainly concerns cereals and oilseeds. On the contrary, oil is still becoming more expensive, “recalls Finlord economist Boris Tomčiak.
According to him, the development of weather is key for agricultural commodities. “This is relatively good in the US and in Europe, which could result in a higher harvest than expected in the spring. In the year-on-year comparison, the price is still quite high, “adds Tomčiak.
Commodities have had a very successful period. Since the pandemic lows, the Bloomberg Commodity Index has risen by almost 60 percent. “Commodity market losses have been declining in recent days, and it is possible that we will not reach a higher peak. The stock markets also have a certain “pause” in growth, “adds Tyleček. Above all, the driving force could be the rapid growth of the global economy.