Commodity markets trying to second guess Fed & China

The past week has been all about the US Federal Reserve and China, with commodity and financial markets trying to second-guess what actions they might take next and could there be a brighter outlook for commodities as a result. We spoke with Gavin Wendt from Mine Life Report about the state of commodities. Iron ore is basically an option on China’s construction industry, says Gavin, and we’ve seen prices recover solidly by 26% since they hit a three-year low of $79 a tonne on October 31. In oil markets Gavin points to the juggling act going on with respect to the world’s major oil producers, as they grapple with supply-side restraints on the one hand that are helping to provide support for crude oil prices, and on the other demand headwinds that could weaken prices. We’ve seen recent copper price movements, which Gavin says are driven by more by investor optimism than underlying reality. Copper prices had recently reached five-month highs on China covid optimism, but the return of restrictions has once again focused attention on the potential for demand weakness. At a time when market sentiment for gold appears finally to be turning, it's interesting to note that prospects in the silver market are also on the improve. The latest data from the Silver Institute suggests that global demand is expected to rise 16% this year to 1.21 billion ounces, creating the biggest deficit in decades.