From the Desk of Ian Culley @IanCulley
The big news in commodities this week is gold breaking down to its lowest level since early 2020.
I recently outlined what a downside resolution for the shiny yellow rock could mean for inflation and the entire commodity space.
Spoiler alert: a fresh leg lower from gold doesn’t bode well for raw materials or the prospects of sustained inflation.
Nevertheless, inflation hasn’t gone anywhere, at least not yet.
As long as that’s the case, we expect commodities to see further upside, albeit not in unison. The broad rally witnessed at the end of 2020 into 2021 is unlikely to be repeated in the near future.
Regardless, stellar buying opportunities will present themselves.
We aren’t going to let the bifurcated nature of commodity markets stop us from catching the next explosive rally.
In other words, the supply and demand dynamics for copper don’t affect our decision to trade soybeans or wheat.
Instead, let’s trade what is in front of us – even as concerns of a global economic slowdown accentuate differences among the various contracts.