2017 has indeed proven to be a turbulent year and many investors are wondering what the markets may next have in store. Whether referring to the relatively fragile state of the Eurozone, the Brexit confirmation or the decidedly dubious track record of the Trump administration, some are looking to diversify into commodities to offset any unexpected open-market volatility. Which sectors do analysts believe will perform the best throughout the remainder of the fiscal year?
The Possible Glory of Gold
Many analysts are closely watching the prices of gold, and for good reason. Colin Cieszynski recently noted that the abandoned Trump healthcare bill has caused jitters across the markets; resulting in a slight (albeit perhaps short-lived) currency rally. While this would normally be counter-intuitive regarding bullish gold prices, other factors need to be considered. Notably, the levels of United States are predicted to jump from 77 per cent to an unsustainable 150 per cent over the next 30 years. Furthermore, political uncertainty in other major economies such as the United Kingdom will likely drive gold prices moderately higher. As this yellow metal already gained 7 per cent during Q1, further positivity is likely realistic.
Industrial Commodities Set to Surge
The World Bank has predicted a sizeable surge in the prices of industrially backed commodities during 2017. The reasoning behind this observation is quite simple. The strengthening demand for energies and metals is quickly outstripping the present supply. There are two important takeaway points here which should be highlighted:
• Oil is set to rise to approximately $55 dollars a barrel; an increase of 29 per cent when compared to 2016.
• The price of metals is expected to increase by 11 per cent; a revision of the 4 per cent highlighted in October 2016.
Copper could be poised to make massive gains, as large economies such as China continue to demand larger amounts for industrial necessities. Some believe that the target of $2,600 dollars a tonne is perfectly reasonable. Still, this has yet to materialize.
Could Black Gold be a Golden Investment?
It is always wise to examine predictions surrounding oil, as this commodity tends to be a relatively accurate barometer in regards to economic performance in general. There are two factors to take into account. First, OPEC hopes that crude will top off at $60 dollars a barrel by the end of 2017. Considering that WTI crude is currently trading at just over $51 dollars, such a rise would be beneficial for investors.
However, we must also take into account plans within the Trump administration to emphasize fracking and to further stress the development of fossil fuels (in direct contrast to his predecessor). While it can be difficult to predict how many of these promises come to fruition, it is not altogether unreasonable to imagine that some short-term rallies within this sector will become possibilities soon.
The Bottom Line
Commodities are predicted to perform moderately well throughout the remainder of the fiscal year. Should instability and uncertainty continue to impact short-term market sentiments, it would be wise to closely monitor these potentially valuable strategic options.