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Commodities outperform in 2021

Commodities outperformed other assets as the recovery from the pandemic increased demand, though gold’s poor performance dampened investor enthusiasm.

Commodities that often perform well late in economic cycles expect to remain competitive with equities in 2022 as global growth continues to rise.

For the first time in a decade, the S&P Goldman Sachs Commodity Index has outperformed the S&P 500 equity index.

Oil prices rose on Tuesday, but investors remained concerned about the widespread Omicron coronavirus variant worldwide, prompting countries to consider additional restrictions to reduce fuel demand.

Brent crude futures were up 59 cents, or 0.8 percent, to $72.11 a barrel by 0418 GMT, while WTI crude futures in the United States were up 73 cents, or 1.1 percent, to $69.34 a barrel.

New Zealand’s international border’s planned reopening postpones, while several other countries have reinstated social distancing measures. Many countries are on high alert just days before the Christmas and New Year’s holidays, with Omicron infections spreading quickly across Europe, the United States, and Asia, including Japan.

In laboratory testing, a booster dose of its COVID-19 vaccine appeared to protect against the rapidly spreading Omicron variant. This news gave investors some hope.

Gold Hemmed in A Tight Range

Gold prices remained trapped in a narrow range as a slightly weaker dollar offset an improvement in risk sentiment. At the same time, a surge in cases due to the Omicron coronavirus variant remained a source of concern for investors.

Spot gold was up 0.1 percent at $1,791.73 per ounce. US gold futures were down 0.1 percent at 1,792.30.

The US dollar index was trading near recent lows. It lost ground overnight due to a setback to Democratic spending plans in Washington. A weaker dollar makes greenback-priced bullion more appealing to foreign investors.

As evidenced by recent rapid retreats on rallies above $1,800, gold investors lack the stomach for any loss. According to Halley, gold lacks the momentum to break out of its current rangebound trading. Hence, it has become somewhat of a forgotten asset class as the year comes to a close.

Despite a bruising Wall Street session, Asian stocks rose as Chinese markets welcomed Beijing’s push to assist troubled real estate firms. However, increasing cases of the Omicron variant remained a source of concern for investors.

Many countries are on high alert for the virus’s spread, just days before Christmas and New Year’s celebrations. The latest health crisis weighs on financial markets and threatens global economic recovery.

Spot silver was unchanged at $22.24 per ounce. Platinum was down 0.2 percent to $930.46. Moreover, Palladium was unchanged at $1,749.80.

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