The Covid-19 pandemic created a widespread worldwide economic shutdown, depressing demand and disrupting supply chains for commodities in practically every sector-energy, base metals, agricultural items, and even the occasional precious metal.
Nevertheless, Gold surpassed $2,000/ounce for the first time in history in August, rising 16.8% in US dollar terms as low interest rates made the precious metal a more tempting investment.
Silver is another precious metal that has seen big surges in the recent year, reaching $30/oz in early August, a price that has not been seen since 2016!
Inflation is a big contributor towards high commodity prices. As a result, in circumstances like this, commodity investments could potentially yield to a better return.
Performance and Forecasts 2021 onwards
Covid vaccinations have transformed the commodity sector. As businesses reopen, travel, transportation and other business operations resume, the economic cycle saw fair improvements and the sudden demand for raw materials and petroleum products have seen to affect gold, silver, and oil prices.
Already this year, numerous markets have seen significant optimistic sentiment, inspiring many analysts to forecast a brighter future for commodities as the world has started to get back to normality.
According to the World Bank's semi-annual Commodity Markets Outlook, commodity prices have started to build up during Q1 of 2021 and are likely to remain similar to current levels throughout the year, filling up speculations among traders and economists that a "supercycle" has begun.
A commodities supercycle occurs when the prices of a variety of base materials remain much higher above their long-term monetary trendlines for a long period of time (even decades).
