Commodities Headed for a Fright?
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Quarterly Forecast Update Edition
Macroeconomic Developments:
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Commodity markets were spooked in early October by the dramatic sell-off in government bonds. Complicating matters, the economic outlook appears split between a recession and a soft landing. Thus, the roller coaster ride is likely to continue for commodities in the coming months.
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Crude oil is likely to remain among the most volatile commodities given recession fears and OPEC+’s desire to keep prices elevated. The picture is clouded by the situation in the Middle East and the risk that Iranian output could be curbed via sanctions or disruptions in the Strait of Hormuz.
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Gold prices are also on edge, having been whipsawed by the Fed’s hawkish tilt and renewed U.S. dollar strength. Still, heightened uncertainty and central bank buying will likely keep a floor under prices.
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BMO Economics' projection for global growth remains at 2.9% for 2023 but was lowered a tick to 2.7% for 2024.
