Commodities Prices Decline Over Concerns Of Recession And Interest Rate
The commodity market is mostly experiencing a sharp decline, and the metals are leading this descent downwards. The reason for this can be attributed to the COVID-19 restrictions in china, interest rate hikes in the world, and the concerns of a possible recession.
All over the world, the possibility of a recession is increasing, and the recent quarantine measures in various Chinese cities are also putting pressure on various commodities. Another factor is the increasing strength of the dollar, which is also making things difficult for the commodities.
Rising Inflation And Interest Rates
One thing is certain, and that is the rise of interest rates all over the world. Globally, inflation is rising, and it seems that the only tool in the central bank's arsenal is the interest rate. Now that's not to say that rising the interest rate is the best solution - It slows down the economy and can cause people to lose their jobs. It seems that the central banks around the world will have to find another way to combat inflation besides increasing the internet rates.
Recently, the ECB is also giving hints of a possible interest rate hike. If we look around, China is also facing a big turmoil in its real estate sector which has the ability to shake the world.
All of these things are putting pressure on the metals market, which is showing the sharpest declines among other commodities.
Aluminum and copper are already down by 7%, while lead is down by 4.6%. Similarly, nickel is down by 4.2%, and Zinc is down by 12.6%. Palladium which is a precious metal, is down by 4%, while Gold has registered a loss of 1.5%.
In Europe, the concerns about the energy crisis are turning into a stark reality as Russia has suspended gas deliveries. Similarly, tighter fiscal policies and signs of recessions tell us that the demand for copper will drop.