It will get worse, before it gets better

Our forecast of slower global economic growth in 2019 poses a major headwind for commodity prices this year. What’s more, we are expecting further falls in global equity prices, which suggests that investor sentiment towards riskier assets more generally, including commodities, will remain negative. That said, gold is likely to benefit, given that it doubles up as a safe-haven asset. Looking further ahead, we expect investor sentiment to start to improve in 2020 as the Fed embarks on monetary easing. At the same time, the markets’ focus could return more to the underlying demand and supply fundamentals of individual commodities, which may lead to significant gains in the prices of some industrial metals where supply is looking constrained.