Drivers of Commodity Markets
In my broader analysis of commodity markets, I argued that today’s environment characterized by high inflation, low inventories leading to backwardation, the global transition from fossil fuels to renewables, and geopolitical shocks like the war in Ukraine has created a “perfect cocktail” for a bullish commodity market.
Gold Sentiment Indicator
I co-developed the Hanke-Cofnas Sentiment Indicator, which measures the real-time psychological sentiment toward gold using text-mining and natural language processing (NLP) applied to news, market commentary, social media, and online forums. The sentiment score is expressed on a scale (commonly from –10 to +10) with negative values indicating bearish or negative sentiment whereas positive values indicate bullish or positive sentiment and captures how shifts in sentiment may precede movements in gold prices.
Gold Prices Long Term Outlook
- Commodity markets are experiencing a bullish environment driven by high inflation, low inventories, the energy transition, and geopolitical instability
- Central banks have expanded money supply aggressively, leading to higher inflation and increased demand for gold as an inflation hedge
- Weakening confidence in fiat currencies due to government deficits, Fed politicization, and de-dollarization efforts is driving central bank gold purchases
- Gold prices are projected to reach $6,000 per ounce if current market conditions persist