Oil crash, #Gold drop spells end of commodities boom This year brought little joy for commodity markets as the “oil shock of 2014”, coupled with a stronger dollar and a global slowdown drove investors out of #commodities as an asset class, perhaps spelling the end of the commodity investment “supercycle”. Even as Oil emerged as the biggest loser with prices crashing over 40 per cent to five-year lows, falling below USD 60 per barrel, none was spared as investors punished the likes of Gold, Silver, Natural Gas and Copper. #NaturalGas suffered a severe sell-off as mild weather curbed heating demand in the US, the world’s largest fuel user, while record US production threatened to boost a stockpiles’ surplus. The shockwaves of the ‘Spectacular #Oil crash’ also hit precious metals as investors fret over slowing global inflation, that curbed demand for the bullion, a hedge against rising prices. The dollar’s surge to five-year highs and booming #stockmarkets also lured away investors from precious metals. A roaring US economy which recorded the highest growth in 11 years and the strongest job gains since 1999 fired up the dollar while fueling bets of higher interest rates next year, coming as a dampener for Gold and Silver which tend to flourish in loose monetary policy regimes. A deepening slowdown in China, the world’s biggest metals consumer took severe toll on Copper as a struggling housing market and shrinking manufacturing cut demand for base metals. Does ‘China factor’, coupled with a recession in Japan, Europe stagnation and slower growth in emerging markets mean that industrial commodities have lost their sheen and 2015 would be yet another difficult year?
Posted on: Tue, 30 Dec 2014 12:03:50 +0000
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