In March this year, both the Federal Reserve and the European Central Bank expressed their willingness to cut interest rates this year at their interest rate meetings. In addition, the Swiss National Bank has taken the lead in announcing a 25 basis point interest rate cut to 1.50%, becoming the first central bank in a developed economy to announce an interest rate cut this year. As central banks in Europe and the United States begin to cut interest rates, industrial and consumer demand will increase. Market analysts believe that this benefit is expected to drive up commodity prices this year.
Goldman Sachs expressed its optimism about the commodity market this year in a research report on March 24. The Goldman Sachs research team believes that as lending rates fall, manufacturing picks up, and geopolitical risks continue, raw material prices may rise by 15% this year. At the same time, researchers predict that in the S&P GSCI Commodity Index, the return rate in specific industries such as energy and industrial metals, except nickel and zinc, may reach 20% in 2024.
The Goldman Sachs team believes that U.S. interest rate cuts in a non-recession environment will lead to an increase in commodity prices, with the biggest boost to metals (especially copper and gold), followed by crude oil. Macquarie Group shares this view with Goldman Sachs. Macquarie researchers believe that commodities have entered a new price increase cycle, benefiting from factors such as tight supply and an upturn in the global economy.
But at the same time, the Goldman Sachs team reminded in the report that not all varieties will increase in price, and investors should choose carefully. For example, Goldman Sachs has a bearish view on U.S. commodities such as natural gas, lithium, nickel and zinc.
In fact, commodity prices have already risen in the first quarter of this year. For example, the prices of energy crude oil and copper as an industrial metal have strengthened, and the price of precious metal gold has reached a new high. In the first quarter, the "most rising" commodity was not the above-mentioned items, but an agricultural product that was previously inconspicuous - cocoa. Although it is not “rigorously needed”, as a raw material for chocolate, cocoa is also deeply loved by consumers. Due to climate problems and the impact of pests and diseases in the main producing area of West Africa, cocoa production has recently declined severely. The imbalance between supply and demand has caused cocoa prices to repeatedly break new highs. Since 2024, cocoa prices have increased by 129%.
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Article forwarded from: Golden Ten Data
