Commodity markets were not spared the effects of widespread turmoil in the global banking system. Most prices ended the week lower as investors fled risky assets. The gold and silver prices bucked this trend and surged higher; unsurprising in a week filled with uncertainty. And we are not out of the woods yet. Risks to financial markets remain and if they materialise, they would spill over into commodity markets.
Next week, attention will remain firmly on any signs of stress in the global banking system. But if banking stresses appear to have been cauterised, then commodity prices could rise over the week as risk appetite returns. Attention will shift to central bank meetings in the US on Wednesday and the UK on Thursday. These will set interest rate expectations, and in turn, the outlook for commodities demand. We think both central banks will follow the ECB’s lead and press ahead with rate hikes; we’ve pencilled in 25bp hikes by both. Elsewhere, the flash March PMIs for the US, EU and the UK will be closely watched on Friday.
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