A number of events jolted the global commodities market in 2021, sending it on a roller coaster journey. Vaccines were made available, central banks maintained interest rates low, governments pumped more money into the economy, stock markets reached new highs, and the dollar rose to multi-month highs in the global financial market. With gold trading around the $200 per troy ounce band and silver trading in the $8 per troy ounce range, the bullion component of the commodities market had a choppy pattern. Crude oil prices rose to seven-year highs in 2021 as global economic conditions improved, increasing demand while supply remained constrained due to key suppliers curtailing output during the epidemic. Base metals, which move in lockstep with the manufacturing sector, saw a considerable price fluctuation in 2021 due to a supply restriction caused by mine and smelter closures, as well as significant development in the industrial sector.
Best Buy Commodities in the near time: Top 5
Gold
Gold prices experienced a rough journey in 2021, falling from an all-time high in August 2020. The impact of coronavirus-induced global economic growth began to ease following the global roll-out of vaccines and efforts by governments and central banks to get the economy back on track, with CME gold futures trading far below $2000 per troy ounce. Because other asset classes such as equities, bonds, and currencies were strong in 2021, worldwide gold demand was modest. Total gold supply in the first nine months of 2021 was 3505.10 tons, roughly identical to the same time a year before. Total gold demand in the first nine months of 2021 was 2755.80 tons, down 4.61 % year on year.
Gold would re-attract market players’ attention in 2022, as it has been a popular commodity for its use as a store of value, inflation hedge, and safe-haven asset in troubled times. In 2022, the gold market will be driven by demand from jewelry, ETFs, and central banks. Despite the fact that other asset classes are performing well, we may see a decent drop in the first half of 2022, which would be supportive of gold. CME gold is likely to trade in a broad range of $1680 to $1980 per troy ounce, while MCX gold is predicted to trade in the Rs. 44000 to Rs. 55000 per 10 grams range.
Silver
The global silver market saw minimal activity in 2021, with gold reacting at times and industrial metals reacting at other times. In 2021, CME silver moved in a narrow $8 per troy ounce range, with a yearly low of $21.41 and a high of $30.35 per troy ounce. MCX silver futures fluctuated from Rs. 15280 per kg to Rs. 73666 per kg on the domestic front, with a yearly low of Rs. 58386 and a high of Rs. 73666. Globally silver supply increased by 8.20 % year over year to 1056.20 million ounces in 2021, according to The Silver Institute, while demand jumped by 15.29 % to 1033.10 million ounces.
In 2021, global silver consumption climbed by 15.29 % year over year to 1033.10 million ounces, up from a 9.98 % drop the year before. In 2022, rapidly expanding economic conditions in industrial areas, as well as fabrication demand, will keep worldwide demand for silver afloat. Silver demand will be boosted by strong manufacturing growth projections and credit expansion among industrial nations. As a result, silver on the CME is predicted to trade between $20.00 and $30 per troy ounce, while silver on the MCX is expected to trade between Rs. 55000 and Rs. 75000 per kilogram.
Crude Oil
Crude oil was the talk of the year in 2021, as global oil demand began to improve following the global deployment of vaccines, regaining its lost glory of 2020. Crude oil prices have soared to seven-year highs. Consumer demand expanded steadily in 2021, with the removal of movement limitations and the universal distribution of vaccination. The global economy is predicted to expand as a result of improving economic conditions, as evidenced by a variety of indicators. As a result, oil companies began progressively increasing production, bringing the total supply of oil to 95.59 million barrels in 2021.
Due to increasing energy demand, oil prices are expected to remain higher in 2022, with both OPEC and the IEA estimating consumption of more than 100 million barrels per day. Efforts by the government and the central bank to keep the economy on a growth path would boost economic activity, resulting in a rise in oil consumption. WTI and Brent crude oil are expected to trade in the $60-$90 per barrel and $65-$95 per barrel ranges, respectively, while MCX crude oil is expected to trade in the Rs. 4500-6750 per barrel range.
Copper
Copper’s price action was the strongest in 2021, with the LME 3-month forward contract hitting an all-time high of $10746 per ton on strong demand from the world’s largest consumer, China, with strong growth in the stock market, manufacturing, and housing sectors, and low inventories at exchange warehouses. World copper mine production increased by 3.1 % in the first nine months of 2021, according to the International Copper Study Group’s supply-demand predictions. Primary production increased by 1%, while secondary production increased by 5.5 %, resulting in a 1.7 % increase in global refined copper output.
The worlds apparent refined copper usage increased by 1.5 % in the first nine months of 2021. With rising consumption demand from all industrial nations, the copper forecast in 2022 appears to be optimistic. Copper inventories in LME registered warehouses are near yearly lows, and government regulation on environmental issues, as well as wage issues at key mines, are expected to keep copper prices higher. Prices on the LME 3-month forward contract are expected to trade between $8600 and $11000 per ton, while MCX copper futures are expected to trade between Rs. 670 and Rs. 850 per kg.
Aluminium
Due to a supply bottleneck caused by mine closures, China’s power curtailment, the global energy crisis, and declining exchange warehouse supplies, aluminum prices have risen to an all-time high across the board. LME 3-M aluminium forward contract prices jumped 64% to $3198 per ton from a yearly low of $1953.80 per ton, while MCX aluminium futures jumped 63% to Rs. 259.35 per kg from the yearly low of Rs. 159.20 per kg.
Due to growing consumption demand following the global economic recovery, aluminum inventories at the exchange warehouse have been steadily declining. China’s power rationing rules have a significant impact on production. Due to supply concerns, aluminum has corrected from an all-time high towards the end of 2021, but it still has a lot of room to scale to a new high in 2022. New environmental policies in China, the world’s largest producer, are likely to have an impact on production as the country pushes for cleaner energy. Aluminium on the LME is expected to trade between $2400 and $3300 per ton, while aluminium on the MCX is expected to trade between Rs. 200 and Rs. 280 per kg.
Conclusion
Researchers predict supply chain disruptions to ease in 2022, but commodity balances will be less tight than in 2021. This should lead to a decrease in pricing from current levels. However, we believe they will continue to outperform long-term averages.
So, while analysts expect some minor downside risks all across commodities complex in 2022, prices are likely to trade at elevated levels next year, based on historical data. The coronavirus pandemic is, of course, the most serious threat.