Thanks to China’s rebounding economy, commodities ended 2020 on an upswing with standout performances by the usually dull duo, iron ore and copper.
China’s recovery led demand thanks to stimulus spending from the central government which was matched by trillions of dollars in spending and support programs in other major economies such as the US, UK, Europe, Australia, Canada, Japan and South Korea.
While precious metals look set for further gains in 2021, with silver tipped to outperform, industrial metals, led by copper especially, look likely to build on 2020’s gains thanks to the rise in renewables.
While spot Asian LNG prices recovered as 2020 went on for a gain of more than 140% on booming demand and outages in key suppliers, oil prices (WTI and Brent) ended the year with gains of just over 20% – although the rise from the lows in March and April were more than 40%.
Iron ore prices ended 2020 on a solid note with gains of 74% or more. The price of 62% Fe fines delivered to northern China ended the year at $US160.47, compared to $US92.13 at the end of 2019.
Three-month copper on the London Metal Exchange rose 27% this year, the sector’s best performer. On Comex it was a similar performance – up more than 25%. But the gain from the lows in March ($US2.10 for Comex) was more than 67% as well as the metal ended the year at $US3.52.
Comex silver rose 47.9% and Comex gold was up 25% on the back of a rush of buying by investors seeking value in a year of heavy government stimulus and global central bank spending. Palladium jumped more than 20% in 2020 and platinum, 10%.
Silver climbed from $US18 an ounce in January to almost $US30 in August before slipping to around $US25.
Traditionally seen as a safe place to store money, gold began to rise as economic growth slowed in 2019, but the pandemic accelerated the rally and in August prices hit a record high of $2,072.50.
Analysts, however, are growing more cautious about the prospects for gold as the global economy recovers from the impact of the coronavirus.
The pandemic triggered stockpiling by investors looking to protect their wealth. This, alongside supply deficits, pushed gold and palladium prices up by more than 20% this year, while silver rose 47%, and platinum 10%.
“We are going to see new record highs for gold and palladium (in 2021),” said Philip Newman at consultants Metals Focus. “But silver will see the chunkiest gains,” he added.
Silver climbed from $18 an ounce in January to almost $30 in August before slipping to around $26.20
Gold began to rise as economic growth slowed in 2019, but the pandemic accelerated the rally and in August prices hit a record high of $US2,072.50 before falling away as news about COVID vaccinations emerged in November and dominated market thinking. Comex gold ended 2020 at just over $US1,901 an ounce.
