The threat of a trade war and the continued growth of the global market have helped the long sluggish asset class of commodities.
Experts within the field see the trend continuing, even starting what traders call a “supercycle” of long-term price increases.
“Long-term when you look at the global picture, it sets itself up for a measured supercycle,” said Mike Wilkins, a commodities expert for Fidessa, a London-based trading technology provider.
“Beyond the rhetoric and saber-rattling, there is a good, compelling story for growth and continued uptake in the end for commodities, especially base metals,” Wilkins said.
Commodities took a dip in early February, but since that point, the group has seen a pointed rally. The PowerShares DB Commodity Index Tracking exchange-traded fund is up about 9 percent since then, and 16 percent over the past 12 months.
Likewise, the CRB Commodity Index has also risen. It is at a high not see since late 2014.
Oil prices, similarly, are also at highs not seen since 2014. U.S. West Texas Intermediate crude futures peaked at $69.56 a barrel.
International benchmark Brent crude rose 30 cents, or 0.4 percent, to $73.79
“I do think we could see $70 pretty quick, but I want to caution that maybe we’ll see the market level out a little bit in a few weeks,” said Phil Flynn, an analyst at Price Futures Group.
Nickel and aluminum also rocketed to multi year highs, on the talks that Saudi Arabia had its sights set on $80 to $100 a barrel oil.
“It has been a very erratic day, it’s a bit crazy,” said Rabobank metals sector economist Casper Burgering.
“Nickel went up by almost 10 percent and aluminum by almost 8 percent, and now are coming right back down.”
The bullish attitude in the markets comes on the heels about wider optimism for economic growth. The global economy is expected to grow this year at its fastest pace since 2010.
A poll taken by Reuters, which surveyed 500 economists worldwide, further supports this claim.
“A rally so far [has been] led by energy and metals, the rallies in gold and silver are young while oil and copper have room to trend,” said Paul Ciana, technical strategist at Bank of America Merrill Lynch.
The broad index, “suggests commodity markets are on the verge of signaling a secular bull trend,” he said.
