Global Commodities Forecast For 2020

While experts are somewhat cautious in their estimations, we can now get a better sense of how gold, oil and copper may perform in the new year, while also contemplating how data from 2019 can help form expectations around commodity trading in the new year.

The Nature Of Commodity Trading

Commodities give traders the opportunity to diversify their portfolios by way of temporarily moving cash during a volatile stock market. Commodities have historically moved directly opposite to stocks, and are slightly more predictable if you have the right resources.

These days, there are specialized tools available to help both new and experienced traders. John Kicklighter, Chief Strategist at DailyFX, says that “global commodities [are] an invaluable resource to traders”, especially when used in conjunction with available tools that provide signaling power in the form of live data and relevant pricing information.

Forecasts For 2020

Analysts have looked into the performance of commodities in 2019 to get a better sense as to how they may perform in the new year. Optimistic trade talk directly benefited commodity markets in the first two quarters of 2019. A global slowdown in activity affected overall volatility, with commodity markets dipping in the second half of the year.

This has affected confidence around how gold, oil, copper and other commodities are expected to perform at the start of the new decade.

The Gold Forecast
The gold market performed well in 2019, with prices up more than 20% at its peak. Uncertainty in global forecasts in the second half of the year coupled with a slowing growth has increased the overall appeal of ‘safe havens’ like gold. In 2020, this trend should continue, facilitating price increases.

A recent gold price forecast suggests it may average around $1,475 per ounce over the course of the new year, which isn’t far off from 2019’s highest price of $1,500 per ounce, making it a stable bet for traders looking to buy and sell.

The Oil Forecast
Sentiment around crude oil performance is lukewarm based on the global political landscape. Oil has been heading to a crossroads for the past five years, and the new year may well bring some curious adjustments. In 2019, a key price driver was lower than expected demand, with estimates that went down from 1.4 million barrels/day at the start of the year to just 900 million barrels/day in December.

Crude oil price changes have also had an incredibly strong correlation to risk assets (like the Dow) in recent months and the expectation is that the momentum will continue into the new year. The main determining factors to watch include possible OPEC+ policy amendments, as well as China’s increased demand for crude oil. ICE Brent will likely start 2020 at $60/barrel, with estimations suggesting that increased demand will push it to$67/barrel by this time next year.

The Copper Forecast
Over the course of 2019, the price of copper remained fairly stable, and while some risk assets and commodities are sensitive to changes in speculative action, copper demand is unlikely to fall victim to this in 2020. It is more likely to follow movements in economic health (dictated by monetary policy action) and financial expansion/contraction. Supply growth is set to increase, but is still vulnerable to potential disruptions. The benchmark treatment and refining charge for 2020 has landed at $62/ton, compared to $80/ton in 2019.

The imposition of import taxes – a likelihood when considering US/China trade talks – almost always smothers growth. If copper tariffs start to bleed into other economies, this can have a substantial effect on prices and leave world leaders across developed and developing economies at loggerheads, further affecting prices.

Global Commodities: A Look Into The Past

When it comes to successful forecasting, it helps to get a comprehensive overview of past performances. If you’re hoping to trade in commodities like gold, copper, oil or natural gas, technology now grants you access to extensive backdated data in order to help you best speculate on future performances.

If you’re interested in learning more about the past performances of gold, oil, copper and more to help you develop your strategy for 2020, have a look at DailyFX’s global commodities interactive tool, where you can learn about the history of global commodities over the past decade. The tool provides you with access to reports and data for imports and exports, which can be filtered by a simple toggle option on the world map. 

Keeping An Open Mind About the 2020 FX Outlook

It will come as no surprise that the performances of commodities in 2020 will be closely tied to global economic policies and the adjustment of trade agreements. It’s an election year for the US and volatile trade agreement discussions with China are in the works, meaning it makes sense not to bank all your estimations on a single baseline scenario. Preparing for multiple scenarios, as well as considering real time changes in the global political landscape, can make a big difference in the outcome of your trading efforts in the new year.

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