The unrelenting rise of the dollar and tightening monetary policies are proving to be a nightmare for commodities. Commodity prices are headed for a decline in September, through the current quarter, and have further extended the decline from the 2022 highs.
A sharp fall in commodities is majorly attributed to the strengthening of the greenback, which has reached a multi-decadal high and has further surged after the US policymakers rejected the notion that there could be a coordinated global effort to rein in the US currency.
The prices are also in a downward spiral due to the aggressive rate hikes by the central banks that have fuelled recessionary concerns worldwide.
Gold has sharply corrected by 20 percent since its 2022 highs of $2,052 an ounce and is trading at $1,625 an ounce. Silver is losing its shine after a 33 percent fall from its 2022 high of $26.39 an ounce to trade at $17.20 an ounce.
The energy prices have fallen significantly owing to recession warnings. Crude oil and natural gas are down 38 percent and 30 percent from their 2022 highs to trade at $77 and $6.7.
Oil’s recent slump also makes way for the Organisation of Petroleum Exporting Countries (OPEC) and its allies to cut production to arrest the rout. Reports claim that Russia wants OPEC+ to cut production by about 1 million barrels a day at its October 5 meeting.
Copper, the bellwether metal for the global economy, is down by 37 percent from its 2022 high of $5.02 to currently trade at $3.3. Aluminum has corrected the most in the industrial metals category. It has fallen nearly 50 percent from this year's high of $4,103, to trade at $2110.
Prices of other metals have also dropped significantly from the 2022 highs, with steel losing 25 percent, iron ore 37 percent, zinc 26 percent, and nickel 47 percent.
Cotton is down 43 percent from its 2022 highs of $158 per pound to trade currently at $88 per pound.
Palm oil prices have halved from their year's high of 7,104 MYR per tonne to trade at 3530 MYR per tonne.Wheat prices have plunged 17 percent from 2022 highs of $1277/bushel to currently trade at $869/bushel.