There’s no doubt about it; the commodities market took a bit of a battering in 2018, as the value of commodities such as oil, copper, iron ore and sugar plunged.
These prices fell amid a myriad of geopolitical issues, from ongoing trade tensions between the U.S. and China to the continued global economic slowdown.
So far, 2019 has also seen the commodity market gripped by uncertainty and sustained volatility. In this post, we’ll appraise the most volatile assets in this market and ask how traders can profit from them, whilst also considering which instruments can help investors to mitigate their risk?
Whilst oil prices have fluctuated throughout 2019, they’ve largely declined since last year’s peak during the fourth financial quarter.
A longstanding imbalance between supply and demand remains at the heart of this issue, as U.S. shale output achieved record highs and OPEC struggled to introduce adequate supply cuts in a timely fashion.
The volatility of oil has also been underpinned by the global geopolitical risk premium, with prices set to plunge further in the coming quarter and beyond.
This should be music to the ears of CFD traders and spread betting enthusiasts, who can leverage depreciating oil prices by speculating on the extent of their decline.
At the other end of the spectrum is gold, with gold bulls having seized the initiative during the final months of 2018 as the value of this precious metal increased.
There’s plenty of evidence to suggest that gold will remain a safe haven for investors in 2019, particularly as the global economic climate worsens. Make no mistake; investors are seeking secure stores of wealth amid ongoing market turmoil, making gold a valuable asset that can deliver long-term gains.
This represents an excellent way of diversifying your portfolio in the current climate, whilst providing a foundation for sustainable returns over time.
Copper is another metal that holds potential for investors, and not only because it’s also a practical commodity that benefits from different types of demand.
In fact, cropper endured its worst price run since 2015 last year, dropping by every quarter and suffering significantly against the backdrop of the U.S.-China trade fall out.
This downward trajectory has largely continued in 2019, despite a brief period of respite during the first quarter. Most recently priced at $2.58 per pound, copper is currently providing an opportunity for CFD traders to hedge against the asset in a bid to bank short-term profit.
This window of opportunity won’t exist forever, however, especially with 2020 set to provide a more supportive backdrop as the underlying industry indicators improve.
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