Sky-high commodity prices on borrowed time

Supply shortages have directly pushed up the prices of energy commodities and have indirectly raised prices of other commodities by boosting production costs. We think this will remain the case for at least another few months. But as we move away from winter in the Northern Hemisphere and these supply shortages ease, we forecast that commodity prices will fall across the board. In the oil market, a rise in both OPEC+ and US supply will be the main factor dragging prices lower, while subdued Chinese demand will be the key factor weighing on the prices of industrial metals. Meanwhile, we now expect the Fed to raise interest rates four times this year, which should mean that the recent move higher in real yields is sustained. Consequently, we are also negative on the outlook for the gold price.