Rain always follows sunshine. This wisdom also applies to the stock market – and deserves special attention in the annual review of commodities. A number of commodities saw remarkably strong performance in 2023, with the prices of gold and orange juice reaching all-time highs – However, the important commodity indices are more or less on track to close 2023 with minimal losses. Pressure from many energy commodities and grains is largely responsible for this.

Commodities slightly in the red in 2023 Source: stockcharts.com

Here you can see the performance of the Wisdom Tree Commodity Index Fund. On a year-on-year basis, it shows a small loss of 2.2%. This is mainly due to the sharp drop in gas prices (-45%) and coal (-64%), but also for the grains (wheat -19%). The industrial metals also did not deliver the best year, with copper performing relatively well with a 2.4% increase when viewed retrospectively.

But there were also strong rays of hope…

Gold reached a new all-time high at over $2,100 an ounce Source: stockcharts.com

What is particularly remarkable about this development is that the gold price has had a strong performance despite the extremely restrictive monetary policy of the US Federal Reserve, which has been raising the interest rate at an unprecedented speed. That says a lot.

2023 – a harbinger of a strong commodity year 2024 Gold is an economic barometer, a blend of financial indicator and commodity. Oil, copper and wood are leading industrial indicators – and all held up relatively stable in 2023.

The development in 2023 could thus be a harbinger of higher commodity prices in 2024. The Fed’s shift to a looser monetary policy stance and the recent declines in the US dollar index are highly positive signs for the commodity class in the coming year. But more about that in detail in the annual outlook next week.

Conclusion: a successful commodity year 2024 Many commodity prices have held up much more steadily in 2023 than many market participants had expected. And that despite the massive headwinds in the form of the extreme tightening policies of the global central banks and, above all, the Fed, which has applied the brakes to the fullest. With the end of US interest rate hikes and a weak dollar, the tide is turning towards massive support for commodity prices in the coming year 2024.

In addition, many commodities have become extremely cheap after the last two years, which increases the likelihood of massive supply problems in the various markets. For example, in the platinum market, which is heading for a massive deficit.

In addition, we are currently only at the beginning of a new structural commodity bull cycle, which has come about after the years of massive neglect of investments in the development and expansion of commodity production and in view of the requirements of the global energy transition.