Markets to remain concerned about China’s demand

Industrial commodity prices trod water this week as investors struggled to assess the extent of the economic fallout from COVID-19. That said, the lingering sense of uncertainty put wind in the sails of precious metals prices. It will be difficult to predict the direction of commodities prices until we have a better handle on the scale and duration of the Wuhan virus. However, if the epidemic can be contained over the next few weeks, we think that commodities prices would bounce back fairly quickly.   Next week, commodities prices will continue to take their cue from developments regarding the coronavirus. Indeed, if economic activity in China is clearly not rebounding by the end of February, we will be reviewing our commodity demand and price forecasts. Otherwise, we expect Germany’s Ifo Business Climate index (published Monday) to trend down, which may soften industrial metals prices.