The European Central Bank’s decision to launch a large-scale programme of government bond purchases under quantitative easing (QE) is unlikely to provide a major boost to the prices of global commodities – even gold. Developments in emerging economies are far more significant to many commodities. Nevertheless, the impact should still be marginally positive as it should help prevent a major consuming region from tipping into a dangerous deflationary spiral.
There are signs that oil prices are stabilising as US rig counts fall and global investment plans are abandoned or postponed. What’s more, the latest global business surveys indicate that economic activity is picking up again. Meanwhile, the death of Saudi King Abdullah shouldn’t have a major impact on prices as it is unlikely to shift the Kingdom’s oil policy away from protecting market share. Elsewhere, precious metals have had a good week, particularly gold and silver.
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