Will Commodity Prices Continue To Rise In April?

What a difference a quarter makes. The New Year began with a bout of optimism that the global economy was off to a strong start in 2023. Now economists predict a deep recession is on the way caused by a fallout from the collapse of several prominent banks from Silicon Valley Bank to Signature Bank as well as the disorderly implosion of Credit Suisse.

After eleven consecutive days of banking turmoil, that began in the U.S and rapidly spread across the global banking system – a trio of major central banks from the Federal Reserve, European Central Bank to The Bank of England continued to press ahead with another round of rate hikes last month.

Global Credit Crunch Looms

The Fed has now jacked up interest rates at the fast pace in history – from virtually zero to a current range of 4.75% to 5% – the highest rate since 2007. Put another way, that’s a whopping total of 475 basis points of hikes since March 2022.

Conclusive evidence shows the global banking crisis was fuelled as a direct consequence of soaring interest rates and liquidity risks. But this crisis is now about to get even bigger as it rapidly morphs into a “Global Credit Crunch”.

Historically, 11 of the last 14 Fed tightening cycles since World War II have been known to set the economy up for an even bigger crisis ahead.

Precious Metals Benefit from Current Financial Climate

One of the biggest beneficiaries of the current financial climate that we find ourselves in right now – has been the precious metals.

Gold closed the first quarter trading just below $2,000 an ounce. The precious metal has been on an unstoppable run, rallying from the $1,800 level at the beginning of March to above $2,000 an ounce – not once, twice but three times last month – notching up an impressive gain of over 10%, its biggest monthly gain since July 2020.

Gold prices have now risen for a second straight quarter in a row – up over 19% in the last 6-months – to score their biggest back-to-back quarterly gain in history.

Elsewhere, Oil prices skyrocketed 8.5% within literally “seconds” of the Monday open, after OPEC+ announced they would cut production by more than 1 million barrels per day – a surprise move, which has thrown further fuel on the inflationary fire!

As traders know – there is a strong correlation between inflation and Commodity Prices. When inflation accelerates at a red-hot pace, so does the prices of Commodities.

This monumental move, now enviably sets the stage for Commodity prices to hit fresh record highs in the months ahead as the sector continues to gather massive bullish momentum.

Extraordinary times create extraordinary opportunities and right now, we are amidst one of the greatest eras of wealth creation the world has seen. Whichever way you look at it, the case for Commodities in a well-diversified portfolio has never been more obvious than it is right now!

Commodity Price Forecast for April 3, 2023

Where are prices heading next? Watch The Commodity Report now, for my latest price forecasts and predictions: