The return of commodities
Not only have commodity prices delinked from other asset classes, their returns have also climbed steadily in the first quarter of 2014
Not only have commodity prices delinked from other asset classes, their returns have also climbed steadily in the first quarter of 2014. Citigroup Global Markets suggests this is a return to fundamentals. For instance, weather and geopolitics boosted investor sentiment for energy and agriculture, and safe haven demand for gold, the brokerage said. To be sure, the sustainability of this rally is a bit shaky largely because of the questions surrounding China, the largest consumer of many commodities. However, here, too, Citigroup sees some relief. It forecasts a moderate boost in demand towards the end of this year as the Chinese government provides support, including infrastructure investment, tax cuts and social housing programmes, to boost growth.
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