With the global economic recovery and strong inflation trading, investors are expected to usher in a new commodities supercycle in 2021. FXStreet believes that industrial metals such as silver and copper are likely to rise more than gold and oil prices.
Silver is more widely used in industry, and it is considered to be the second largest inflation hedge after gold. So if a potential vaccine and a stimulating global economic recovery are achieved, the silver metal is likely to see a strong recovery in demand for industrial applications.
In contrast to gold, the price of gold is likely to continue to be supported by the continued implementation of large-scale fiscal and monetary stimulus measures around the world and the prospect of higher inflation. However, the extent of this growth may not be in line with that in 2020, as governments may delay stimulus measures if vaccine-driven economies gain momentum.
Demand for copper has been boosted by unprecedented moves by the US and China for copper-intensive renewable wind power projects. If the price of copper exceeds $8000, the impact to $10, 000 cannot be ruled out.
Oil prices are likely to break even by 2021. As transportation and tourism may take several years to return to the normal state before the outbreak, there is still limited room for oil to rise further. Even so, vaccine-driven optimism about economic recovery and stimulus measures could still contribute to a rebound in oil prices.
