Energy and agriculture prices to remain elevated through 2022, gold price to see only modest gains – World Bank

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(Kitco News) – The begin of 2022 has seen unprecedented strikes in commodity markets throughout the board. And the World Bank expects prices to remain elevated through the yr as Russia’s warfare with Ukraine continues to disrupt.

Tuesday, the World Bank launched its newest commodity price forecasts, with considerably greater price outlooks for vitality and agricultural commodities.

“The price of Brent crude oil is projected to common $100 [per barrel] in 2022, a 42% improve from 2021 and its highest stage since 2013. Non-energy prices are anticipated to rise by about 20% in 2022, with the largest will increase in commodities the place Russia or Ukraine are key exporters. Wheat prices, particularly, are forecast to improve by greater than 40% this yr, reaching an all-time excessive in nominal phrases,” the analysts stated within the report.

Looking previous this yr, the World Bank stated that the battle in Eastern Europe would have essentially the most important affect on commodities.

“While prices usually are anticipated to peak in 2022, they’re to remain a lot greater than beforehand forecast. The outlook for commodity markets relies upon closely on the period of the warfare in Ukraine and the severity of disruptions to commodity flows, with a key danger that commodity prices may very well be greater for longer,” the analysts stated.

Energy and meals prices have been a strong point of interest, inflicting inflation to rise to multi-decade highs worldwide. Looking on the vitality market, the report famous that prices have risen 4-fold from traditionally damaging prices in April 2020 to March’s highs, “the most important 23-month improve in vitality prices because the 1973 oil price hike.”

Meanwhile, meals prices have risen 84%. “These will increase in prices are having main humanitarian and financial impacts and exacerbating meals insecurity and inflation in lots of nations,” the report stated.

However, not all commodities are anticipated to shine vibrant this yr. While treasured metals have seen a powerful begin to the yr, the World Bank sees only a 3% achieve for the sector this yr. For 2023, the report stated that analysts see prices falling sharply.

“Gold prices are anticipated to improve modestly in 2022, earlier than falling by 10% in 2023, weighed down by tighter financial coverage within the EU and the United States, with further price will increase anticipated this yr and subsequent by the U.S. Federal Reserve to tackle inflationary pressures,” the analysts stated.

“In the long term, gold prices may very well be affected by the Bank of Russia’s insurance policies, and ought to it have interaction in massive gold gross sales, prices may drop materially,” the report added.

Looking on the silver market, the World Bank sees decrease silver prices through 2022 as industrial demand begins to weaken due to decrease exercise from China. However, the analysts additionally famous silver’s potential with the worldwide inexperienced vitality transition.

“Risks to the forecast embrace a quicker tempo of the vitality transition if nations select to speed up funding in zero-carbon sources of vitality rather than fossil gasoline imports,” the report stated.