Raw materials

Rising gold, silver, copper and other commodity prices: what to expect?

Posted by MoneyController on 05.04.2024

The price of some commodities (gold, silver, copper, oil, etc.) is rising. But what are the prospects and reasons for these price rises?

What is behind the rise in the price of gold?

The price of gold continues to break all records. According to analysts, there are probably a number of factors behind this rise: expectations of interest rate cuts, geopolitical uncertainty, the massive buying of gold by many central banks and fears of a return of inflation. But it is not just gold that has rallied in recent weeks.

Copper, silver and oil prices are also rising

The prices of copper (over $9,000 a tonne) and silver (up from $25 an ounce to just under $26.8) have also risen sharply, as has the price of oil (today, 5 April, Wti is quoted at $86 a barrel and Brent at $91).

Are commodities anticipating inflation?

As Vito Lops points out in 'Sole 24 Ore', this rise in prices could be a harbinger of things to come: the return of inflation. Indeed, Lops - who cites the thoughts of Stefano Bottaioli, an independent consultant - explains that soft commodities are also growing. And it is often the case that the rise in commodity prices is a harbinger of a general rise in prices.

Why is inflation likely to rise again?

It is fair to ask at this point what could cause inflation to pick up again, given that we are at the end of a tight monetary policy cycle that the Federal Reserve will not begin to loosen until June at the earliest. Lops points out that one cause could be US deficit spending, which is running at around 6%. This high level of spending - even in the face of very low unemployment (the rate is 3.9%) - could be the reason why the US GDP growth forecast for this year has been raised from 1.4% to 2.1%. The real risk is that such high spending could act as a fuel for renewed inflation.

Read also:

How does investing in commodities work?

Inflation, stagflation and deflation

What are interest rates?

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