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Keeping an Eye on Global Commodity Markets: Five Key Charts to Watch This Week

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Key Charts to Monitor in Global Commodity Markets This Week

As a new week begins, here are five important charts to keep an eye on in the world of commodities.

Metal Prices and Interest Rates

The recent speech by Federal Reserve Chairman Jerome Powell, indicating a potential for further interest rate hikes, has affected spot gold prices. The precious metal's rally may be short-lived due to the inverse relationship between gold and interest rates. Additionally, global holdings in bullion-backed exchange-traded funds have been declining for several weeks.

Fossil Fuel Subsidies

Despite pledges to combat climate change, subsidies for fossil fuels reached a record $7 trillion last year. Explicit and implicit support for oil, coal, and natural gas contributes to the equivalent of 7.1% of global GDP. Reducing these subsidies will be crucial for limiting global warming.

Shale Oil Production

US shale oil drillers are scaling back operations, leading to an expected decline in production over the next two months. Volatility in oil prices, driven by concerns over output cuts and economic recovery, adds further complexity to the market.

Agricultural Impacts

Ukraine's crop exports have been significantly affected by Russia's disruption of its Black Sea ports. With limited routes to the market and ongoing conflict, Ukraine's grain stockpiles are projected to increase. Meanwhile, Russia's wheat exports are booming, benefitting from Ukraine's weakened position. Monitoring these charts will provide valuable insights into the global commodity markets throughout the week.

Implications of Global Commodity Market Trends for New Businesses

The key charts in global commodity markets this week could have substantial implications for new businesses.

Impact of Metal Prices and Interest Rates

The potential for further interest rate hikes, as indicated by Federal Reserve Chairman Jerome Powell, could affect businesses reliant on gold and other precious metals. The inverse relationship between gold prices and interest rates could mean a short-lived rally for gold, impacting businesses in the jewelry and technology sectors.

Effects of Fossil Fuel Subsidies

Despite a record high in subsidies for fossil fuels, new businesses, particularly in the renewable energy sector, could seize the opportunity to innovate and offer sustainable alternatives. The push to reduce these subsidies and limit global warming could drive demand for green energy solutions.
Shale Oil Production and Agricultural Impacts
The scaling back of US shale oil production could lead to volatility in oil prices, affecting businesses in the energy sector. Additionally, the disruption in Ukraine's crop exports due to Russia's interference could impact global food supply chains, posing challenges for businesses in the food and agriculture sectors. These trends underscore the importance of monitoring global commodity markets for strategic business decision-making.
Story First Published at: https://financialpost.com/pmn/business-pmn/five-key-charts-to-watch-in-global-commodity-markets-this-week-19
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