Commodity Prices Consolidate As Traders Await Next Bullish Catalyst – What’s Next?

This comes as no surprise, considering the current macroeconomic backdrop is fuelling a “perfect storm” for Commodities, sending prices across the board to fresh multi-month highs.

Gold’s Parabolic Rise Amidst Geopolitical Uncertainty

You certainly cannot talk about Commodities without mentioning Gold – And that’s because the precious metal has been on a parabolic run since the Israel-Hamas conflict began on October 7.

On Friday, Gold prices surged to fresh three-month highs to close out the week with a second straight weekly gain – off the back of safe-haven demand and growing expectations that the Federal Reserve may not hike interest rates again in this increasingly uncertain geopolitical climate.

The precious metal has been on an unstoppable run, rallying from near the $1,800 level at the beginning of October to a three-month high within striking distance of $2,000 an ounce on Friday – notching up an impressive gain of over 21%, from this time last year.

The bullish momentum has also split over into Gold priced in other currencies such as British Pounds, Euros, Australian Dollars, Chinese Yuan and Japanese Yen – sending prices skyrocketing to all-time record highs.

The big question now is will Gold price in US dollars be next to hit all-time highs?

Only time will tell, however one thing we do know for certain is that right now, Gold is doing what it does best – acting as the ‘go-to’ safe-haven in times of uncertainty.

Gold’s rally during the Israel-Hamas conflict marks the fourth major spike since the outset of the Covid-19 pandemic. Gains also followed Russia’s invasion of Ukraine and the collapse of Silicon Valley Bank – which on each and every one of these occasions sent prices blasting above the key $2,000 an ounce mark.

The current spike in prices once again validates what Commodity traders have known for decades: The precious metal is everyone’s favourite trade in times of crisis.

Data shows, the increasingly chaotic nature of the war is continuing to attract new capital inflows into the precious metal as a hedge against escalating geopolitical risks.

Commodity Markets React to Geopolitical Tensions, Uncertainty Looms

Elsewhere in the Commodity markets – Energy prices have been whipping up an explosive money-making storm – firmly positioning the entire sector as one of the hottest asset classes of 2023.

Last week, Oil prices continued their bullish rally with Brent Crude surging above $93 a barrel, while WTI Crude Oil climbed above $90 a barrel. Meanwhile, European gas prices notched up as stunning 40% gain, the largest weekly leap on record seen, so far this year.

Conflicts in the Middle East can send shockwaves through the global economy because the region is a crucial supplier of Oil, Gas and Natural Resources as well as a key shipping passageway.

The Israel-Hamas war is now the second geopolitical shock for the global economy in less than two years. The wider the conflict spreads, the greater the magnitude. If history is anything to go by, then the stage is almost certainty set for Commodity prices to hit new record highs in the coming weeks and months ahead.

Commodity Price Forecast

Where are prices heading next? Watch The Commodity Report now, for my latest price forecasts and predictions: