Is The Pullback In Commodities A Buying Opportunity?

Phil Carr
Published: Feb 16, 2024, 19:32 UTC

After an explosive start to 2024, that saw Commodities across the board hit new multi-year and all-time record highs – prices have pulled back this month as trader’s bank windfall profits – ready to capitalize on the markets next big move.

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These big market moves have presented savvy traders with a series of highly lucrative opportunities to profit from the recent macro-driven rally as well as the huge price reversal that has subsequently followed.

According to GSC Commodity Intelligence – “a new era of macro has begun and it will dominate every narrative of the global economy over the next decade”.

Put another way, macro-opportunities are everywhere and they are here in abundance! For traders, this is news to celebrate, which is why a long list of the world’s most powerful Wall Street institutions are describing the current economic backdrop as “The Golden Age of Trading”.

As traders know – when Commodities go on sale, you have to buy them because in this current economic environment prices don’t stay cheap for long.

And that is exactly the trend we are seeing playing out right now across the Commodity markets.

This comes as no surprise, because once you step back and take a look at the bigger picture, fundamentally, nothing has changed.

Fundamental Analysis for Commodities

Despite the near-term volatility, traders still remain ultra-bullish on Commodities due an ever-growing number of macro and geopolitical factors that are currently unfolding.

These include; the Impact of shipping disruptions in the Red Sea alongside the climate change crisis, which is sending a spectrum of Agricultural Commodities surging to new all-time record highs.

National Elections taking place in over 50% of the global economy – with a combined total of over 4 billion people set to vote – positioning 2024 as the biggest election year ever in world history.

The eagerly awaited “pivot” away from aggressive interest rate hikes to bigger-than-expected rate cuts in 2024 and beyond. According to Jerome Powell and his colleagues at the Fed rate cuts are still on the table, but traders will probably have to wait until the second half of this year. For now, the name of the game is patience.

And last but definitely not least – global transition towards Green Energy and Net Zero Emissions, will is already starting to play a critical role in supercharging demand for the world’s highly essential Commodities and Rare Earth metals.

That view was echoed earlier this week by TotalEnergies Chief Executive, saying “that fundamentally the energy transition will mean higher prices for Energy and Commodities”.

In a note to clients, analysts at GSC Commodity Intelligence continued to double down on the view that “any substantial pullbacks should be viewed as buying opportunities because Commodity prices rarely stay low for long”.

Commodity Price Forecast

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

About the Author

Phil Carrcontributor

Phil Carr is co-founder and the Head of Trading at The Gold & Silver Club, an international Commodities Trading, Research and Data-Intelligence firm.

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