When it comes to sheer volatility, some of the hottest performers of any asset in 2021 were commodities. Copper gained 21% in value and US crude oil prices rose by 40%. Gold, however, lost value for the first time in three years, more specifically, 5% of its value, due in part to expectations of imminent interest rate hikes by the US Federal Reserve. When interest rates go up, challenging times for gold prices may lay ahead because the US dollar, once strengthened by the hike, often weighs on demand for the metal, since gold is denominated in dollars. Also, gold bullion doesn’t offer interest, making it less attractive to traders in times of uncertainty than assets that offer interest.
On the other hand, bullion tends to gain popularity in times of high inflation, as we saw toward the end of 2021. In addition, the emergence of the omicron variant of Covid-19 in November last year supported the “safe haven” trend, which normally includes gold. Still, the rate hikes expected in March 2022 made “Precious metals appear vulnerable to consolidation”, said Bart Melek of TD. In the first months of the year, the precious metal may be trading no higher than $1,800 per ounce, according to Ole Hansen of Saxo Bank. For those planning to trade gold prices online in the form of CFDs, the news in late January saw volatility keeping gold demand fairly strong. More than that, increasing tensions between the USA and Russia over the Ukraine may have further contributed to safe haven sentiment. Thus, despite the growing hawkishness of central banks, gold prices held their ground as February approached. For those with an interest in trading gold prices online as well as other commodity CFDs such as online silver prices or gasoline, let’s review some of the attention these commodities have recently earned and try to peer into their future.
Are online silver prices outshining gold?
Early in 2021, a certain amount of controversy surrounded the fact that silver prices suddenly shot up to their highest in eight years, which some saw as a result of the stimulation provided by the Reddit WallsStreetBets forum that called silver “THE BIGGEST SHORT IN THE WORLD”. This led to concerns about the use of price manipulation techniques that, early last year, caused large, sudden share price movements in the company Gamestop. Traders learned not to “Doubt the purchasing power of retail investors, and this has been sufficiently demonstrated on the silver market”, said Howie Lee of Overseas-Chinese Banking Corp. The prices of spot silver, gold and platinum all rose in January. Shares in mining companies were also boosted, including China Silver Group Ltd., which experienced a 63% price leap.
At the end of January, Goldman Sachs Group Inc. called silver the “Preferred precious metal.” When 2021 had closed off, though, analysts felt silver had performed below expectations. For instance, the ETF iShares Silver Trust SLV lost 18% of its stock value in 2021. Traditional industrial metals like copper, tin, and nickel all had a good year, however, and this is partly the reason why many analysts are expecting a big rebound for online silver prices in the new year. Silver is also an industrial metal, and about half of the mined silver in the world is used in industry. It therefore looks positioned to ride the waves of the solar power and electric vehicle markets, which both need silver to function properly. The increased global trend to green energy could, therefore, up silver demand in times to come. However, the Silver Institute predicts silver supply may run low this year due to the pandemic, which could push online silver prices upward.
Gasoline prices remain buoyant
When 2022 was starting out, consumer demand for gasoline was strong and crude oil prices were up. The result was higher gasoline prices for the first time since November last year when, after prices grew to their highest in seven years, US President Joe Biden released crude oil from the Strategic Petroleum Reserve in order to get them under control. In the same month, when Omicron made its appearance, the immediate results were a drop in crude oil price due to fears of travel bans and muted demand, which bolstered the president’s efforts to keep prices down. After the facts seemed to indicate the new strain was mild, oil prices rebounded. Gasoline demand was at a healthy 9.29 million barrels per day at the end of December.
If you’re a CFD trader focused on top commodities like gold, online silver prices and gasoline, this is the year to stay informed. In the words of Everett Millman of Gainseville Coins, 2022 may be the time for “Silver to finally break out.” While gasoline prices hinge on the spread and control of the Omicron variant, gold prices tend to respond to potential effects of Fed policy, high inflation, and political tensions so, as the weeks roll by, stay focused on the news for vital updates and valuable trading insight.