Commodity prices have had a good few months, which is consistent with our relatively positive views on the medium-term outlook. The easing of fears about China’s economy has helped industrials, while commodities in general have benefited from hopes of an extended period of very low global interest rates. Gold’s status as a safe haven has been polished by the Brexit vote, while silver has shone even brighter. Nonetheless, the coming months may be much tougher. In particular, commodities are vulnerable to a resumption of Fed tightening and renewed strength in the US dollar. The next leg up in oil prices may have to wait, although we continue to expect Brent and WTI to recover further (to $60pb) in 2017. In the meantime, gold may benefit again from increased global uncertainty ahead of (and perhaps after) the US Presidential elections in November.
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