Lately, I have been going through my portfolio on commodity and clients have also asked whether to buy Gold going forward to hedge against inflation.
I will be reinstating my view on the precious commodity that I had written about one year ago. Those clients who have heard my presentation during our monthly market update through Zoom in the last year (2021) would have also remembered that I was discouraging them from buying gold then.
Presently, I am still negative (both technical and fundamentals) about the prices of commodities (Oil, CPO, Gold and Hard commodities like aluminum and copper) going forward. In fact, I have also written an article on the price of CPO and other commodities like oil and hard metals in general end of April 2022. Link to the article here. I believe for the rest of the year, with no changes to the global energy macro-environment, prices of oil should have seen its high. However, with the outstanding war in Eastern Europe, the price of oil should stay in the region of US$90-US$100, which means upside is pretty capped.
I believe that the inventory buildup of these commodities and slowing demand will put a downward pressure on their prices. Moreover, commodities have been a crowded trade since the Eastern European war started (contrarian mindset), as such, I continue to believe that price upside is capped. Therefore, I am advocating to continue reducing exposure to them and commodity companies like RIO and Oil majors XOM, CVX, MPC. Wilmar, Golden Agri, Bumitama, First Resources and Kencana for the Singapore listed CPO plays.