What are the perspectives for commodities? What is the global impact of them?

Several commodities (oil, gold, cocoa, coffee, etc.) are rising sharply in 2024. But before analysing whether the trend is likely to extend to other products, It is necessary to distinguish between agricultural and industrial commodities. The trend of the former is connected to imponderable factors, such as meteorological ones, while the value of the latter varies according to measurable phenomena. At Plenisfer we think that some of these are at the center of long-term bullish trends such as uranium and copper, both crucial for the energy transition. More generally, it is above all the imbalance between increasing demand and limited supply that determines price trends. This factor is accompanied by geopolitical tensions, which can also further impact the supply chain, and the resilience of the economy which further supports demand.

A separate discussion for gold, which shines on the markets for at least two factors. First, for purchases made by central banks. Overall in the last two years, they have purchased 30% of the gold produced: the Asian ones in particular are grappling with a dedollarization process and are significantly increasing the share of gold in their reserves on which the precious metal still represents a marginal share compared to the West.

The increase in the cost of commodities certainly has an inflationary impact that we have already experienced post-pandemic. But the tip of the balance is oil: if it were to rise above $100 it would produce a significant inflationary impact. However, I do not expect it to have an impact on monetary policies. Only extraordinary exogenous events, with long-term structural impacts on oil prices, such as a decisive expansion of ongoing conflicts, or a very strong restart of the Chinese economy, currently not on the horizon, could lead central banks to review the own inflation models and therefore to significantly change monetary policies.