Commodities Price Gauge Falls To 8 Months Low On Recession Fears

last updated on

Commodities Price Gauge Falls To 8 Months Low On Recession Fears

Commodities Price Gauge Falls To 8 Months Low On Recession Fears

The commodities price gauge, which tracks the prices of all the major commodities, fell to an 8-month low after rising fears of a global recession. If the global recession actually happens, it will seriously dent consumer spending, which will, in turn, hurt the commodities as their demand will be decreased as well.

Right now, all the major economies in the world are facing a fear of recession, such as Germany, the USA, the UK, France, and so on. If this happens, then the global demand for copper, oil, wheat, and all the other commodities will also drop significantly!

In fact, the Commodity spot index, which tracks the commodities prices, is already at its yearly low. After peaking in the month of June, the commodity index has lost 22% of its value since the start of the Russia-Ukraine war. Experts believe that the commodities price index will drop even further considering the worsening economic conditions.

Another factor that is weighing heavily on the commodities is the relentless surge of the US Dollar... The rise of the USD is making it more expensive for different countries to buy commodities. Since the commodities are denominated in the USD and with a higher USD value, the demand for commodities is simply slowing down.

In simple words, it is getting expensive to buy the commodities in the USD, which is, in turn, hurting the demand side. As a result, experts believe that the indices which track the commodities prices will experience more downside in the coming weeks and months.

Experts believe that the chances of a slowdown in demand are getting very high... A quick look around the world reveals interest rate hikes and uncontrollable inflation, which is on the verge of throwing the world into a full-blown recession.

If an economic slowdown happens in the world, then the energy demand will get hurt sharply and will also push the investor's appetite for riskier assets down as well!

Trending Stories