There’s good news ahead for commodities, with a particular bet on metals, as the outlook for the dollar looks to stay grim, according to experts.
DoubleLine CEO Jeffrey Gundlach made a call for commodities during a webcast Tuesday, during which he predicted commodities would soon outperform stocks. This correlates with the weakness of the dollar, which in the last week hit its lowest levels in more than three years.
“Usually when you get a bad year in the dollar, it’s followed by one or two more bad years,” Gundlach said.
Analysts speaking to CNBC agreed, noting that the euro’s strength and broad-based global growth will also buoy commodities through 2018.
“It’s absolutely true that even though in the course of 2017 the correlation between oil commodities generally, and the dollar, has weakened, it is still a very very big driver. And the causality really goes from the dollar, to commodity prices,” said Sabine Schels, the head of fundamental commodities research at Bank of America Merrill Lynch.
Oil prices are still on track for a fifth monthly gain, despite U.S. crude slipping this week amid a sell-off in both stocks and commodities.
Copper, palladium, and more recently platinum and gold have all seen a pickup in the last three months following the more pervasive dollar weakness. This is a huge relief for commodities exporters, particularly across many natural resource-dependent countries in South America and Africa, which saw their economies tank when commodity prices plummeted in 2015.
via CNBC
Content is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Business Information & Services, Inc. or any of its affiliates, subsidiaries, officers or directors. If you would like to reproduce or redistribute any of the content found on MarketPulse, an award winning forex, commodities and global indices analysis and news site service produced by OANDA Business Information & Services, Inc., please access the RSS feed or contact us at info@marketpulse.com. Visit https://www.marketpulse.com/ to find out more about the beat of the global markets. © 2023 OANDA Business Information & Services Inc.
Alfonso Esparza
trader focused on North America and emerging markets. He has been published by The MarketWatch, Reuters, the Wall Street Journal and The Globe and Mail, and he also appears regularly as a guest commentator on networks including Bloomberg and BNN. He holds a finance degree from the Monterrey Institute of Technology and Higher Education (ITESM) and an MBA with a specialization on financial engineering and marketing from the University of Toronto.
Latest posts by Alfonso Esparza (see all)
- Market Rally Still Going Low Holiday Volumes Awaiting Start of 2020 - 27 December 2019
- Market Awaits China Retaliation on Trade - 29 November 2019
- Alibaba to Close Order Book Ahead of Huge IPO - 18 November 2019