Skip to main content

Investor buying will support prices, for now

Despite some parts of China re-introducing lockdown measures and reported virus cases around the world continuing to spiral upwards, the prices of most commodities held up well this week as investor enthusiasm for risky assets remains high. We suspect that investor buying will continue to support most industrial commodity prices for some time. However, we think that the prices of almost all industrial commodities, with the notable exception of oil, will fall in the second half of this year as the gradual withdrawal of fiscal stimulus in China leads to lower growth in demand Next week, the Fed is scheduled to meet on Tuesday and Wednesday. We think that it will leave its policy settings unchanged. Instead, the focus is likely to be on Fed Chair Jerome Powell’s post-meeting press conference. Powell may use the opportunity to downplay the prospect of tighter monetary policy, despite the likelihood of more fiscal stimulus soon, which could put renewed downward pressure on the US dollar and give a slight boost to commodity prices, particularly gold.

Become a client to read more

This is premium content that requires an active Capital Economics subscription to view.

Already have an account?

You may already have access to this premium content as part of a paid subscription.

Sign in to read the content in full or get details of how you can access it

Register for free

Sign up for a free account to gain:

  • Unlock additional content
  • Register for Capital Economics events
  • Receive email updates and economist-curated newsletters
  • Request a free trial of our services


Get access