News Digest: Commodities rally could further impede rate cuts

April 16, 2024

News Digest:

The commodities boom over the month could end up complicating the playbook of central banks led by the US Fed. The hardening of prices resulting from multiple factors across the globe, could further nudge up inflation numbers and derail prospects of rate cuts.

According to a news report, even before Iran’s attack on Israel stoked fears of a broader regional war leading to oil supply disruption, crude prices had risen significantly. In parallel, gold and silver prices continued to rise with analysts now expecting the yellow metal to touch $2,700.

The US consumer price index has already risen more than anticipated, thus negating hopes of a rate cut in June. But, prices of copper, coffee, and cocoa too surged in the global markets, fuelling concerns over a further spike in the inflation numbers in the coming weeks.

All of this has caused investors to return to ETFs with the 20 largest, broad-based commodity ETFs attracting around a billion US dollars since the beginning of March. This has led to investors flocking back to the commodities market after the late 2023 sell-off.

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