Risks (mostly) still on the downside

Commodities will not of course underperform other assets for ever, especially with end-user demand supported by a strengthening global economy. In comparison, valuations in equity and bond markets are looking stretched. Nonetheless, it may still be too soon to call the turn given the prospects for supply. The price of crude oil will set the tone and should fall back as Middle East risks finally recede. Supply of industrial metals and agriculturals is also likely to be ample. However, gold could enjoy a “last hurrah”, this year at least.