Commodities will continue to struggle in 2015: Credit Suisse

Commodities have had a bad run last year and their losing streak could linger on into 2015, Credit Suisse Private Banking said in a report. -- PHOTO: REUTERS
Commodities have had a bad run last year and their losing streak could linger on into 2015, Credit Suisse Private Banking said in a report. -- PHOTO: REUTERS

SINGAPORE - Commodities have had a bad run last year and their losing streak could linger on into 2015, Credit Suisse Private Banking said in a report.

Commodity prices fell this year and markets are still facing oversupply, commodity strategy analyst Stefan Graber noted.

He said that the oversuppy was due to "excessive" capital expenditure over the past few years.

Since demand for commodities does not seem to be picking up, prices will have to fall further until production declines, he said, adding: "As commodity projects have long lead times, this process will take time."

The biggest drag on overall commodity prices last year came from oil. The prices of benchmark Brent crude oil traded in London have nearly halved since June.

"Lower oil prices provide a potential catalyst for the global economy in 2015 but only if consumers and businesses chose to spend or invest the windfall from lower oil prices rather than saving it," Mr Graber said.

The prospects for gold and silver remain lacklustre, he added, noting that precious metal prices were the most sensitive, out of all commodities, to the United States dollar.

The strengthening greenback plus the expected lack of any significant jump in demand for physical gold will keep gold prices depressed this year, he said.