FXStreet notes that aside from rising supply, commodity prices face a number of other headwinds over the next year including the prospect of a stronger U.S. dollar and higher US Treasury yields. Against this backdrop, strategists at Capital Economics expect that the price of gold will fall.

“We have become more negative on the outlook for the price of gold. The gold price has already fallen a long way from its 2020 peak in tandem with higher real yields in the US.” 

“Given the rapid progress on vaccinations, large fiscal stimulus, and the Fed’s apparent willingness to accept higher long-term interest rates, we doubt it will be long before real yields start to rise again.” 

“We expect the price of gold to trend lower over the next couple of years.”

FXStreet reports that strategists at Capital Economics expect oil prices to rise a little further over the next couple of quarters. A rebound in demand at a time when supply is set to remain relatively constrained should widen the deficit in the global oil market and push the price of Brent up to $75 per barrel by Q3 2021. However, they think prices will then begin to drop back as increasing supply shifts the market into a surplus. 

“As vaccines are rolled out and restrictions are lifted, we anticipate a surge in oil consumption. In particular, we think pen-tup demand for travel will mean that oil consumption will exceed pre-pandemic levels in Q3 this year, which underpins our forecast that the price of Brent Oil will peak at this time at around $75 per barrel.”

“The strong increase in oil demand this year will keep the market in a deficit. But rising prices will inevitably incentivise higher supply.”

“Our end-year forecasts for Brent are $70, $60 and $55 per barrel for 2021, 2022 and 2023 respectively.”